Estimate of Equilibrium Real Exchange Rate and Misalignment of Chinese Yuan Vis-a-Vis US Dollar
Journal Title: Academic Journal of Economic Studies - Year 2015, Vol 1, Issue 3
Abstract
The paper examines the misalignment in equilibrium real exchange rate of Chinese Yuan against US dollar. The data covered the period of 1980-2014, it used Vector Autoregressive model, the variables are not stationary at level and became stationary after first differencing and there were three co-integration vectors. The long run coefficients have expected sign except for interest rate differential and are significant at 5 percent significance level. The speed of adjustment of real exchange rate to it equilibrium indicated that the disequilibrium in the last period are corrected by 87 percent each year and highly significant. The Yuan was overvalued by 4 percent, from 1981-1990 and in1990 it was undervalue about 4 percent and move back to equilibrium, the highest overvaluation was in 1993 up to 13 percent from equilibrium value and undervalue in 1994 by 14 percent which was the highest level of undervaluation, between 1996 to 2005 the Yuan was relatively within it equilibrium and slightly over value to 3.8 percent in 2008 back to long time path in 2011 and relatively undervalue by 1-3 percent since 2012, in general the Yuan is not substantially undervalue as claims in some studies both theoretical and empirical estimation and the movement in the exchange rate are consistent with economic fundamental of China.
Authors and Affiliations
Atabani Adi Agya, Du Jun
Keywords
Related Articles
- EP ID EP177770
- DOI -
- Views 102
- Downloads 0
Tanzania’s 2010–2015 Development Plan and Industrial Growth
Tanzania is striving to become a middle income country by 2025. So plans are laid down and efforts put forward to industrialize the economy. In 2010 the government initiated a Five Year Development Plan 2010–2015, aiming...
Challenges of the Audit Profession in the Globalization Era
Massive unprecedented changes, that best describe this era, are affecting the accountant and auditor profession, as well as the global business environment. The traditional role of the financial auditor will change, but...
Effects of Capital Structure and Profitability on Corporate Value with Company Size as the Moderating Variable of Manufacturing Companies Listed on Indonesia Stock Exchange
This study aims to determine the effect of capital structure and profitability on the corporate value by company size as the moderating variable on manufacturing companies listed on Indonesia Stock Exchange from 2012 to...
Returns Effect, Shocks and Volatility Transmission between Foreign Exchange-Stock Markets in Nigeria
The paper examined effect of passed return on current return, shocks spillover and volatility transmission between FX-Stock markets. Using result obtained from VAR-GARCH models, we also calculate the optimal weight and r...
Economic Performance of NUTS 3 Regions in the Slovak Republic
Evaluation and self-evaluation of public administration in the conditions of the Slovak Republic has been currently applied only in limited extent. Selected aspects of public administration operation are evaluated throug...