Output’s Response to Change in Exchange Rate: Empirical Evidence from China
Year: 2012
Type: dissertation
Abstract: This study empirically investigates how China’s real output responds to the appreciation of Chinese exchange rate during the period 1980 to 2010. The aim is to explore whether the appreciation of yuan is expansionary or contractionary in China. Since similar empirical studies on the relationship between output and exchange rate are lacking, this empirical work contributes to serve as a guideline on possible directions of effects and future research and it provide several policy implications for China’s policymakers. Cointegration technique and error correction models by using aggregate annual data are applied for empirical analysis. This study finds evidence that yuan appreciation has a negative impact on China’s output in the long run, indicating currency appreciation is indeed contractionary in China which is consistent with theoretical expectation of current and previous studies. In addition, the empirical findings show that China’s real output is positively associated with expansionary monetary policy, fiscal policy and the world output. Key-words: exchange rate, output’s response, China, cointegration, error correction
Author: Wan Li-ping
Language: English
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W606320777