scholarly journals The Inflexible Yuan and Global Imbalances

2008 ◽  
Vol 8 (3) ◽  
pp. 1850144 ◽  
Author(s):  
Anthony J. Makin
Keyword(s):  
Exchange Rate ◽  
Current Account ◽  
Rapid Development ◽  
The United States ◽  
Output Growth ◽  
Exchange Rate Policy ◽  
Global Imbalances ◽  
Trade Surplus ◽  
Trading Partners ◽  
National Production

This paper evaluates China's exchange rate policy and current account surplus in the context of its rapid development. Recognizing that external imbalances reflect divergent national production and expenditure growth within both China and its trading partners, it contends that yuan exchange rate undervaluation against major currencies is central to any explanation of global imbalances. This misalignment artificially assists China's output growth and limits its household consumption, thereby slowing the rise in China's living standards. Meanwhile, due to currency misalignment, China's industrialized trading partners, most notably the United States and European Union, simultaneously experience larger bilateral current account deficits with China, lower output, lower saving and higher investment than otherwise. Further significant appreciation of China's exchange rate would simultaneously reduce China's huge trade surplus and the bilateral deficits of its trading partners, thereby alleviating international trade tensions.

scholarly journals MACRO-ECONOMIC FACTORS OF SINO-US TRADE IMBALANCET

2020 ◽  
pp. 39-57
Author(s):  
Ji. Shi
Keyword(s):  
United States ◽  
Exchange Rate ◽  
Bilateral Trade ◽  
Rapid Development ◽  
Influencing Factor ◽  
Trade Deficit ◽  
The United States ◽  
Trade Imbalance ◽  
Trade Surplus ◽  
Macroeconomic Factors

China is one of the developing countries with the most rapid development and the U.S. is de-veloped country with the strongest economic strength, economic development of the two coun-tries has become main impetus of the world economic growth. Sino-US bilateral trade has be-come the most important constituent part of global trade. With the rapid development of Sino-US bilateral trade, trade imbalance also lead great concern of the two governments and academic circles, especially after China entered into WTO, the problem of Sino-US trade imbalance be-come even more serious. This paper mainly analyzes the influence of macroeconomic factors on China-US trade deficit, as economists generally believe that savings and exchange rates are closely related to trade balance. Undervalued exchange rate can keep relatively low prices for products made in China, while the booming domestic demand in the United States provides China with a wide variety of external market opportunities. This paper points out that difference in saving rates between the two countries is an important macroeconomic reason for the contin-ued growth of China’s trade surplus with the United States in international trade. The RMB exchange rate is an influencing factor, but not a fundamental one.

Czechoslovak Tariffs in the 1920s: An Example of Historical Specificity in Economic Policy

Slavic Review ◽  
2021 ◽  
Vol 80 (3) ◽  
pp. 523-543
Author(s):  
Oldřich Krpec ◽  
Vít Hloušek
Keyword(s):  
Exchange Rate ◽  
Policy Decision ◽  
Exchange Rate Policy ◽  
Heterogeneous Structure ◽  
Trade Surplus ◽  
Transportation Equipment ◽  
The First World War ◽  
Historical Specificity ◽  
Rate Policy ◽  
Trade And Exchange

Czechoslovakia was the first industrialized economy to substantially increase tariffs after the First World War. At that time, Czechoslovakia was highly export-oriented, with a large trade surplus in industrial goods. We argue that the introduction of tariffs was a consequence of the ethnically heterogeneous structure of the economy. German capital controlled the highly export-oriented light and consumer goods industries; Czech capital dominated in industries that were far less export-oriented or even import-competing, such as machinery, transportation equipment, and electrical goods. Trade and exchange-rate policy preferences of both groups clearly differed; however, the policy decision-making process (at least until 1926) was completely controlled by Czechoslovaks and Czech capital, explicitly committed to a nationalist takeover of Czechoslovakia's economy. This is why it was possible to implement an exchange rate and trade policy that ran contrary to theoretical expectations based on the general (national aggregate) indicators of the national economy.

scholarly journals Exchange Rate Dynamics and the Bilateral Trade Balance: The Case of U.S. Agriculture

2009 ◽  
Vol 38 (2) ◽  
pp. 213-228 ◽  
Author(s):  
Jungho Baek ◽  
Won W. Koo ◽  
Kranti Mulik
Keyword(s):  
United States ◽  
Exchange Rate ◽  
Bilateral Trade ◽  
Time Series Data ◽  
The United States ◽  
Agricultural Trade ◽  
Agricultural Products ◽  
Series Data ◽  
J Curve ◽  
Trading Partners

This study examines the dynamic effects of changes in exchange rates on bilateral trade of agricultural products between the United States and its 15 major trading partners. Special attention is paid to investigate whether or not the J-curve hypothesis holds for U.S. agricultural trade. For this purpose, an autoregressive distributed lag (ARDL) approach to cointegration is applied to quarterly time-series data from 1989 and 2007. Results show that the exchange rate plays a crucial role in determining the short- and long-run behavior of U.S. agricultural trade. However, we find little evidence of the J-curve phenomenon for U.S. agricultural products with the United States’ major trading partners.

The US-China Currency Dispute: Is a Rise in the Yuan Necessary, Inevitable or Desirable?

2007 ◽  
Vol 7 (3) ◽  
pp. 1850117 ◽  
Author(s):  
John A. Tatom
Keyword(s):  
Exchange Rate ◽  
Trade Balance ◽  
The United States ◽  
Exchange Rate Policy ◽  
Capital Account ◽  
Trade Imbalance ◽  
Fixed Rate ◽  
Economic Basis ◽  
The Us ◽  
Rate Policy

China-bashing has become a popular US media and political sport. This is largely due to the US trade imbalance and the belief, by some, that China is responsible for it because it manipulates its currency to hold down the dollar prices of its goods, unfairly creating a trade advantage that has contributed to the loss of US businesses and jobs. This paper reviews the problem of the large trade imbalance that the United States has with China and its relationship to Chinese exchange rate policy. It examines the link between a Chinese renminbi appreciation and the trade balance and also whether a generalized dollar decline could solve the global or Chinese US trade imbalance. The consensus view explained here is that a renminbi appreciation is not likely to fix either the trade imbalance with China or overall. If these perceived benefits of a managed float are small or non-existent, then perhaps they should be pursued anyway because of small costs or even benefits for China. Section IV looks at the costs of a managed float in terms of the benefits of the earlier peg. Opponents of a fixed dollar/yuan exchange rate ignore the costs of a managed float for China, especially with limits on currency convertibility. These costs are outlined here in order to provide an economic basis for the earlier fixed rate and China’s reluctance to appreciate. Finally it is suggested that the necessary convertibility on capital account, toward which China is moving, could easily result in yuan depreciation under a floating rate regime. This is hardly the end that China critics have in mind and it is not one that would improve US or other trade imbalances with China.

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