Exchange rate reform and its inflationary consequences: an empirical analysis for China

Lu, M.; Zhang, Z.

Abstract

In examining China's exchange rate policy in the reforming years, the study finds empirical evidence of its long-run inflationary consequences, but the effects appear not to be sizable. In the short run, while changes in the devaluation rate are positively correlated with the increase in the growth rate of inflation, the inflation inertia is also modest. The moderate inflationary cost of devaluations provides some explanation of the smooth transition of exchange rate policy regime in China and the authorities' ability to put more weight on external competitiveness.

Citation

Lu, M., & Zhang, Z. (2003). Exchange rate reform and its inflationary consequences: an empirical analysis for China. Applied Economics, 35(2), 189-199. https://doi.org/10.1080/0003684022000017575

• Journal Article Type: Article
• Publication Date: 2003-01
• Deposit Date: Mar 27, 2007
• Journal: Applied Economics
• Print ISSN: 0003-6846
• Electronic ISSN: 1466-4283
• Publisher: Taylor and Francis Group
• Peer Reviewed: Peer Reviewed
• Volume: 35
• Issue: 2
• Pages: 189-199
• DOI: https://doi.org/10.1080/0003684022000017575
• Public URL: https://durham-repository.worktribe.com/output/1597284