A Tale of Two Surplus Countries: China and Germany

Cheung, Yin‐Wong; Steinkamp, Sven; Westermann, Frank

doi:10.1007/s11079-019-09537-7

Cited by 7 publications

(3 citation statements)

References 66 publications

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“…The estimated misalignments are broadly comparable with those published by CEPII in its EQCHANGE database (Couharde et al, 2018). Moreover, as shown in Giordano (2022), results for euro‐area countries and for China are similar to those in Fidora et al (2021) and Cheung et al (2020).…”

Section: Measuring Real Exchange Rate Misalignmentssupporting

confidence: 85%

Revisiting the real exchange rate misalignment‐economic growth nexus via the across‐sector misallocation channel

Giordano

2023

Rev International Economics

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This study assesses whether the component of across‐sector labor and capital misallocation induced by real effective exchange rate (REER) misalignments in turn significantly affects economic development. REER imbalances are derived from a Behavioral Equilibrium Exchange Rate model; labor and capital misallocation is measured according to indicators in Ando and Nassar (IMF Working Papers, 2017, 17, 1) and Aoki (Journal of the Japanese and International Economies, 2012, 26, pp. 473–494), on a unique cross‐country cross‐sector national account dataset of 54 countries and 12 sectors over 1980–2015. Both REER over‐ and undervaluations are found to lead to rising across‐sector labor (but not capital) misallocation and, uniquely via this channel, significantly hamper real growth.

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Section: Measuring Real Exchange Rate Misalignmentssupporting

confidence: 85%

Revisiting the real exchange rate misalignment‐economic growth nexus via the across‐sector misallocation channel

Giordano

2023

Rev International Economics

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“…Their research included developing countries. While, Cheung et al (2020) analyzed the factors affecting the current account surplus in two surplus countries: China and Germany. Their empirical analyses show that the current account balances of these two countries are quite well explained by currency misalignment, common economic factors, and country-specific factors.…”

Section: Discussionmentioning

confidence: 99%

Analysis of Factors Determining Global Payment Imbalances in 2000-2019

Twarowska-Mol¹,

Twarowska-Ratajczak²

2021

ERSJ

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Purpose:The aim of the paper is to identify and assess the impact of the determinants of global payment imbalances in 2000-2019. Design/Methodology/Approach: The study used the desk research method, including critical analysis of the recent literature and econometric methods of data analysis. The assessment of the evolution of global payment imbalances was carried out using the index of global payment imbalances (GI), while regression analysis based on panel data was used to assess the impact of factors influencing payment imbalances. Findings: The research proves that the factors significantly influenced the current account balances (CAB) in the analyzed countries were, real effective exchange rate, GDP growth, household consumption and government consumption, investment, government budget balance, terms of trade, and crude oil trade balance. Practical Implications: The conducted analyses allowed to formulate several recommendations for economic policy. China's exchange rate policy ceased to be the key factor generating global payment imbalances. Moreover, the change in China's economic model of reducing the role of external drivers of economic growth (export demand) and increasing the role of internal drivers (domestic demand) contributes to reducing China's external imbalances. Whereas, the sources of the U.S. current account deficit are particularly internal factors (domestic absorption). The government budget balance is one of the most important factors determining the CAB. Reducing government spending, can become an effective instrument to improve the current account balance. In addition, the balance of crude oil trade is a factor that has a large impact on the CAB. The energy transition of countries towards renewable sources can reduce global payment imbalances. Originality/value: The results contribute to the discussion on the determinants of the global payment imbalances. In this approach, a comprehensive assessment for all countries and by group is possible.

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“…Thus, our results indicate that exporting firms in China should upgrade technology and product quality to cope with exchange rate risks and to gain more bargaining power in the international market. This may also help reducing China's current account imbalances (Cheung et al 2020).…”

Section: Discussionmentioning

confidence: 99%