Real exchange rate misalignment in China: An empirical investigation

Zhang, Z.

Abstract

Based on the theory of equilibrium real exchange rate, this paper estimates the behavioral equilibrium exchange rate and the resulting misalignment in China. Evidence shows chronic overvaluation in China's central planning period, but economic reforms have brought the real exchange rate closer to equilibrium. The cumulative effect of exchange rate reform led to a substantial real depreciation of the Chinese currency after 1981. Indications are that China now has a proactive exchange rate policy with the nominal exchange rate used as a policy tool to attain real targets.

Citation

Zhang, Z. (2001). Real exchange rate misalignment in China: An empirical investigation. Journal of Comparative Economics, 29(1), 80-94. https://doi.org/10.1006/jcec.2000.1705

• Journal Article Type: Article
• Publication Date: 2001-03
• Deposit Date: Apr 2, 2007
• Journal: Journal of Comparative Economics
• Print ISSN: 0147-5967
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 29
• Issue: 1
• Pages: 80-94
• DOI: https://doi.org/10.1006/jcec.2000.1705
• Public URL: https://durham-repository.worktribe.com/output/1589388