The evolving renminbi regime and implications for Asian currency stability

Ma, Guonan; McCauley, Robert N.

doi:10.1016/j.jjie.2010.09.002

Cited by 59 publications

(23 citation statements)

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“…Second, concerning the issue of the composition of the Asian Currency Unit (see Kenen and Meade, 2008), the observed tighter inter-regional linkages between the ASEAN currencies compared to those with the US dollar provide support for a regional currency index. Although our findings do not imply that the RMB should necessarily become the anchor for the ASEAN region (see also Park, 2008), its observed increasingly influence suggests (in contrast to Kenen and Meade, 2008) that perhaps a regional index including it, or even an RMB-centred one reflecting its growing international role, would be more suitable (see also Mundell, 2003 andMcCauley, 2010) 10 The differences between the individual ASEAN exchange rates emerging from Table 9 and 10 could reflect different fiscal balances, economic growth rates, relative competitive positions and monetary policy stance; for example, You and Sarantis (2011, 2012a, 2012b) incorporate a range of economic fundamentals into alternative exchange rate models to determine the value of the yuan. However, these issues are beyond the scope of the present study.…”

contrasting

confidence: 66%

Exchange rate linkages between the ASEAN currencies, the US dollar and the Chinese RMB

Caporale

Gil-Alana

You

2018

Research in International Business and Finance

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confidence: 66%

Exchange rate linkages between the ASEAN currencies, the US dollar and the Chinese RMB

Caporale

Gil-Alana

You

2018

Research in International Business and Finance

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“…In the past few decades in the exchange rate and TB, China has faced economic structural changes. The RMB management faced a shift from a de facto USD peg from 1994-2005 to a managed floating rate starting in July 2005 (Ma & McCauley, 2011). The People"s Bank of China announced On 11 August 2015 that it would "proceed further with reform of the RMB exchange rate regime and enhance the RMB exchange rate flexibility," with the stress on making the RMB exchange rate reflect "market supply and demand with reference to a basket of currencies" (Yu et al, 2017).…”

Section: Literature Reviewmentioning

confidence: 99%

The Relationship between RMB Exchange Rate and Chinese Trade Balance: Evidence from a Bootstrap Rolling Window Approach

Masih¹,

Li²,

Pervaiz³

2018

IJEF

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This study inspects the fundamental relationship between the exchange rate and the trade balance in China. The outcome shows that the real effective exchange rate and trade balance in China has no causal relationship. Though, seeing structural changes in two series, we got the result those both long-run and short-run associations using full-sample data are wobbly, which proposes that the full-sample causation tests can"t be relied upon. Then, using time-varying rolling window method to reexamine the dynamic fundamental relationship. The results show that real effective exchange rate has both negative and positive impacts on the trade balance in several sub-periods, and in turn, trade balance has same impact on real effective exchange rate for China. These findings provide no support for the existence of J-curve effect and Marshall-Lerner Condition in case of China. This study shows that it is impossible to resolve China"s trade deficit, depending only on the movement of RMB"s exchange rate.

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“…Now is an opportune time for the PRC to wean itself away from reserve accumulation and pursue its selfproclaimed goal of adopting an exchange rate regime characterized by a multiple-currency, basket-based reference rate, and a reasonably wide band. Ma andMcCauley (2011) andAglieta et al (2011) found that during the 2006-2008 period when the PRC managed its exchange rate relative to a basket of currencies and other Asian countries also managed their currencies relative to currency baskets, there was considerable exchange rate stability between the yuan and other East Asian currencies. Thus, if the PRC again shifts to a more flexible regime targeted to a basket of currencies, the huge surpluses that East Asia is running against the US and Europe in processing trade would cause currencies in the region to appreciate in concert against US dollar and euro.…”

Section: Rebalancing Growth In Asiamentioning

confidence: 99%

Transpacific Imbalances and Macroeconomic Codependency

Thorbecke

2011

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Asian Development Bank InstituteWillem Thorbecke is a senior research fellow at ADBI in Tokyo. The author would like to thank Ron Denato, Atsuyuki Kato, Peter Morgan, and participants at the Symposium on Growth and Integration in Asia at the University of South Australia for many helpful comments.The views expressed in this paper are the views of the authors and do not necessarily reflect the views or policies of ADBI, the Asian Development Bank (ADB), its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms.The Working Paper series is a continuation of the formerly named Discussion Paper series; the numbering of the papers continued without interruption or change. ADBI's working papers reflect initial ideas on a topic and are posted online for discussion. ADBI encourages readers to post their comments on the main page for each working paper (given in the citation below). Some working papers may develop into other forms of publication. AbstractCurrent account deficits in the United States (US) and current account surpluses in East Asia are an enduring part of the global economic landscape. They are supported by low saving in the US and by reserve accumulation in Asia. This paper argues that this strategy is causing macroeconomic problems for the People's Republic of China (PRC). Inflation is rising, and interest rates are set too low because the yuan is closely linked to the US dollar. Low interest rates have fueled overinvestment in physical capital and rising real estate prices. They also cause savers to earn negative returns on their bank deposits. Greater exchange rate flexibility would allow more decoupling between the PRC's interest rates and US interest rates, helping the People's Bank of China to implement monetary policy that is appropriate for the PRC. Since exchange rate appreciations would be contractionary for the PRC, they should be combined with domestic absorption-increasing policies such as spending on education, health care, and urban transportation. Interest rates and exchange rates that are more determined by market forces would also help the PRC to move away from an overly capital-intensive growth path to one that is more beneficial for smaller firms and ordinary workers. JEL Classification: F30,...

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The evolving renminbi regime and implications for Asian currency stability

Cited by 59 publications

References 24 publications

Exchange rate linkages between the ASEAN currencies, the US dollar and the Chinese RMB

Exchange rate linkages between the ASEAN currencies, the US dollar and the Chinese RMB

The Relationship between RMB Exchange Rate and Chinese Trade Balance: Evidence from a Bootstrap Rolling Window Approach

Transpacific Imbalances and Macroeconomic Codependency

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