The Renminbi Exchange Rate Revaluation: Theory, Practice, and Lessons from Japan
In recent years the revaluation of the renminbi has been a key topic against the background of internal and external disequilibrium of the PRC economy. This monograph reviews the history of the exchange rate system and current arguments made by various groups. It also surveys different theoretical approaches for determining the exchange rate.
Based on these observations, a two-country general equilibrium model is developed and an empirical test introduced to identify the current degree of misalignment of the renminbi compared to its estimated equilibrium rate. The authors also review the experience of the Japanese yen and identify its implications for the PRC based on the lessons learned.
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The views expressed in this paper are the views of the author/s and do not necessarily reflect the views or policies of the Asian Development Bank Institute nor the Asian Development Bank. Names of countries or economies mentioned are chosen by the author/s, in the exercise of his/her/their academic freedom, and the Institute is in no way responsible for such usage.
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Download this Book [ PDF 1.6MB| 156 pages ].
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