China and its dollar exchange rate: a worldwide stabilizing influence?
In: CESifo working paper series 3449
In: Monetary policy and international finance
Abstract
We argue that criticism concerning the Chinese dollar peg is misplaced as no predictable link exists between the exchange rate and the trade balance of an international creditor economy. The stable nominal yuan/dollar rate is argued to have stabilized Chinese, East Asian and global growth. However, linked to US low interest rates, Chinese sterilization policies and potentially subsidized capital allocation in China the real yuan/dollar rate is undervalued. This has caused - both in China and the United States - structural distortions and threatens to undermine global growth and stability. We propose Sino-American policy coordination to escape from the policy dilemma, which continues to drive global imbalances.
Verfügbarkeit
Sprachen
Englisch
Verlag
Univ., Center for Economic Studies
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