The debt-adjusted real exchange rate for China
Frait, Jan and Komárek, Luboš (2008) The debt-adjusted real exchange rate for China. Working Paper. Coventry: University of Warwick, Department of Economics. Warwick economic research papers (No.850).
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The paper aims to enrich the debate on the overvaluation/undervaluation of China yuan Renminbi (CNY) against USD and JPY by applying the concept of the Debt-Adjusted Real Exchange Rate (DARER). This approach is offering to monetary policy makers another indicator for more responsive management of this important economic variable. The general motivation for constructing DARER is the fact that long-term current account surplus (deficits) is linked with capital outflows (inflows), which often leads to real undervaluation (overvaluation) of domestic currency. DARER can signal to the authorities that the real exchange rate is becoming unsustainable in the medium term. Based on the DARER approach we also introduce three indicators of exchange rate misalignment.
|Item Type:||Working or Discussion Paper (Working Paper)|
|Subjects:||H Social Sciences > HG Finance|
|Divisions:||Faculty of Social Sciences > Economics|
|Library of Congress Subject Headings (LCSH):||Renminbi, Foreign exchange rates, Debts, Public -- China, Banks and baking, Central, International finance|
|Series Name:||Warwick economic research papers|
|Publisher:||University of Warwick, Department of Economics|
|Place of Publication:||Coventry|
|Number of Pages:||16|
|Status:||Not Peer Reviewed|
|Access rights to Published version:||Open Access|
|Funder:||Grantová agentura České republiky [Grant Agency of the Czech Republic] (GACR)|
|Grant number:||402/05/2758 (GACR)|
DRIVER, R. – WESTAWAY, P. (2005): Concepts of Equilibrium Exchange Rates, Bank of England Working Paper, No. 248.
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