Short-run and long-run effects of exchange rate change on trade balance: Evidence from China and its trading partners

Chun Hsuan Wang, Chun Hung A. Lin, Chih Hai Yang

研究成果: 雜誌貢獻期刊論文同行評審

37 引文 斯高帕斯(Scopus)

摘要

As one of largest exporting countries in the world, China has experienced a large amount of trade surpluses for the past decade. However, a growing criticism has been focused on the manipulation of Chinese Yuan (RMB) exchange rate by the Chinese government. While China implemented the exchange rate reform policy in July 2005, the question, whether its currency is undervalued remains as a debatable issue. Different from previous studies by focusing on individual trading partners, this paper tests the short-run J-Curve hypothesis and long-run trade balance effect of real exchange rate between China and its eighteen major trading partners using a panel dataset over the 2005–2009 period. We adopt the methodologies of panel cointegration test, fully modified OLS for heterogeneous cointegrated panel (panel FMOLS) and panel error correction model (panel ECM) to investigate the above examination. Our empirical results lend support to the inverted J-curve hypothesis between China and its trading partners. However, we find that a real appreciation of RMB has a decreasing long-run effect on China's trade balance in only three of the eighteen trading partners, while it has an increasing long-run effect in five of the eighteen trading partners. These mixed findings, therefore, lead to the empirical evidence that the real appreciation of RMB has no overall long-run impact on China's trade balance.

原文???core.languages.en_GB???
頁(從 - 到)266-273
頁數8
期刊Japan and the World Economy
24
發行號4
DOIs
出版狀態已出版 - 1 12月 2012

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