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Can Renminbi Appreciation Reduce the US Trade Deficit?
Author(s) -
Zhang Jian,
Fung HungGay,
Kummer Donald
Publication year - 2006
Publication title -
china and world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.815
H-Index - 28
eISSN - 1749-124X
pISSN - 1671-2234
DOI - 10.1111/j.1749-124x.2006.00008.x
Subject(s) - renminbi , exchange rate , balance of trade , china , economics , zhàng , effective exchange rate , value (mathematics) , international economics , current account , monetary economics , machine learning , law , political science , computer science
Using a computational general equilibrium model, we analyze the impacts of Chinese real exchange rate appreciation on the trade balance of China and the USA and on various industries of both countries. We use several scenarios with 2.1, 6 and 12 percent real exchange rate appreciations for our simulation analysis. The results indicate that China's exchange rate appreciation might not solve the enlarging US current account deficits. Chinese outputs in both primary and manufacture sectors will increase, whereas the outputs of energy and services sectors will be adversely affected. The price of value‐added products declines in light of the renminbi appreciation. (Edited by Zhinan Zhang)