The Overvaluation of Renminbi Undervaluation

Cheung, Yin‐Wong; Chinn, Menzie David; Fujii, Eiji

doi:10.3386/w12850

Cited by 129 publications

(135 citation statements)

References 16 publications

Supporting

Mentioning

122

Contrasting

Unclassified

Order By: Relevance

“…2 As mentioned in the introduction, China is accused of maintaining the RMB rate below its equilibrium level to favor exports. Cheung et al (2007) conducted an empirical analysis that found little evidence of the RMB undervaluation. Eichengreen (2007) refuted that their findings could be interpreted as a rejection of the RMB undervaluation hypothesis because their empirical strategy (i.e.…”

Section: The Resultsmentioning

confidence: 99%

Exchange rate undervaluation and manufactured exports: A deliberate strategy?

Nouira

Plane

Sekkat³

2011

Journal of Comparative Economics

View full text Add to dashboard Cite

a b s t r a c tNouira, Ridha, Plane, Patrick, and Sekkat, Khalid-Exchange rate undervaluation and manufactured exports: A deliberate strategy?Recent literature suggests that a proactive exchange rate policy in accordance with price incentives (i.e. undervaluation) can foster manufactured exports and growth. This paper is built on these recent developments and investigates, using a sample of 52 developing countries, whether such a proactive exchange rate policy is adopted. The results show that during the period 1991-2005 a number of countries has used undervaluation to foster the price competitiveness of manufactured exports. Journal of Comparative Economics 39 (4)

show abstract

Section: The Resultsmentioning

confidence: 99%

Exchange rate undervaluation and manufactured exports: A deliberate strategy?

Nouira

Plane

Sekkat³

2011

Journal of Comparative Economics

View full text Add to dashboard Cite

show abstract

“…To answer this question, we estimate exchange rate misalignment adjusting for the Balassa-Samuelson effect. Specifically, we regress the real exchange rate at PPP on real percapita GDP and calendar-year fixed effects, and the extent of misalignment is measured as the difference between the log of the real exchange rate at PPP and the log of the fitted value from the regression (as in Cheung et al, 2007;Frankel, 2006;Rodrik, 2007). The middle panel of Fig.…”

Section: Economic Characteristics Before and During Surgesmentioning

confidence: 99%

Export surges

Freund

Pierola

2012

Journal of Development Economics

100

View full text Add to dashboard Cite

a b s t r a c tHow can developing countries stimulate and sustain strong export growth? To answer this question, we examine 92 episodes of export surges, defined as significant increases in manufacturing export growth that are sustained for at least 7 years. We find that export surges in developing countries tend to be preceded by a large real depreciation, which leaves the exchange rate significantly undervalued. In contrast, in developed countries, the role of the exchange rate is less pronounced. We examine why the exchange rate is important in developing countries and find that the depreciation is associated with a significant reallocation of resources in the export sector. In particular, depreciation stimulates entry into new export products and new markets. These new exports are important, accounting for over 40% of export growth on average during the surge in developing countries. We argue that a large real depreciation induces firms to expand the product and market space for exports.

show abstract

“…15 The empirical evidence for the HBS effect is mixed. While Chinn (2000), Bergin et al (2006), and Thomas and King (2008) find empirical support for the HBS effect, Lothian and Taylor (2008) and Cheung et al (2007) find weak evidence. I quantify the HBS effect by measuring the labor productivity of China relative to the United States.…”

Section: Harrod-balassa-samuelson (Hbs) Effectmentioning

confidence: 86%