Exchange-rate volatility is a problem for trade … especially when financial development is low

Jérôme Héricourt, Sandra Poncet 19 January 2013

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The increasing volatility of exchange rates after the fall of the Bretton Woods agreements has been a constant source of concern for both policymakers and academics. Developed countries fought hard in the 1980s to limit US dollar fluctuation (one thinks of the Plaza and Louvre’s agreements, respectively in 1985 and 1987), and some European countries took an even more radical decision by giving up their national currency for the euro in 1999.

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Topics:  Exchange rates International trade

Tags:  China, trade, exchange-rate volatility

Capital controls: Gates versus walls

Michael W Klein 17 January 2013

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Capital controls are no longer considered rogue policies.

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Topics:  Macroeconomic policy

Tags:  China, South Korea, capital controls, Brazil

Trade liberalization and embedded institutional reform: Evidence from Chinese exporters

Amit Khandelwal, Shang-Jin Wei, Peter K. Schott ,

Date Published

Sun, 12/02/2012

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productivity, China, misallocation, multifibre agreement

Growth slowdowns redux: Avoiding the middle-income trap

Barry Eichengreen, Donghyun Park, Kwanho Shin 11 January 2013

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The rapid economic growth of so-called emerging markets is one of the leading storylines of our age. Arguably, it is the most important economic development affecting the world’s population in the first decade of the 21st century. Rapid economic growth has lifted millions out of poverty. It has accounted for the vast majority of global growth in a period when the advanced countries have struggled economically and financially.

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Topics:  Development

Tags:  China, middle income gap, slowdown

The appreciating renminbi

Philippe Bacchetta, Kenza Benhima, Yannick Kalantzis 09 January 2013

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In the recent US presidential campaign, China was accused again of currency manipulation. In other words, the Chinese central bank is accused of maintaining the exchange rate at an artificially low level compared to its equilibrium value, including heavy intervention in the foreign exchange market. There has been a fierce debate on this issue in recent years, including on VoxEU.org (e.g., Persaud 2011, Reisen 2011, Reisen et al. 2011, Storesletten et al. 2010).

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Topics:  Exchange rates

Tags:  China, Currency manipulation, Currency wars

Trade liberalisation and embedded institutional reform: Evidence from Chinese exporters

Amit Khandelwal, Peter K. Schott , Shang-Jin Wei 15 January 2013

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Economists traditionally assess the welfare losses of trade barriers without considering the underlying institutions that support them. In fact, these institutions may amplify welfare losses substantially. Corrupt customs agents, bureaucratic red tape and the withholding of goods in bonded warehouses may favour some firms at the expense of others, resulting in a substantial misallocation of resources. Anecdotal evidence along these lines is easy to spot.

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Topics:  Institutions and economics International trade

Tags:  China, import quota, export licence

China’s pure exporter subsidies: Protectionism by exporting

Fabrice Defever, Alejandro Riaño 04 January 2013

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On 17 September last year, the US requested consultations with China concerning a wide range of export-contingent measures – grants, tax preferences and interest-rate subsidies, totalling at least $1 billion – in apparent violation of the WTO’s Agreement on Subsidies and Countervailing Measures, China’s accession protocol and article XVI of the GATT. The EU joined the consultations shortly after on 28 September.

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Topics:  International trade

Tags:  China, WTO, trade, welfare

Value-added exchange rates

Rudolfs Bems, Robert Johnson 06 December 2012

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Real effective exchange rates (REERs) are widely used to gauge competitiveness. Yet conventional REERs, based on gross trade flows and consumer price indexes (CPIs), are not well suited to that role when imports are used to produce exports – i.e., with vertical specialisation in trade.

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Topics:  Competition policy Global economy International trade

Tags:  competitiveness, Germany, global imbalances, China, globalisation, trade, supply chains, iPhone

The renminbi bloc is here: Asia down, the rest of the world to go?

Arvind Subramanian, Martin Kessler 27 October 2012

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The staggering economic rise of China in the last three decades leads to the question of the potential internationalisation of its currency, the renminbi (RMB). Internationalisation has different dimensions. An international currency is widely used in financial and trade transactions, and crucially it is used as a store of value. Some, like Eichengreen (2011) and Frankel (2011) see a potential global role for the RMB, provided important ancillary reforms to the domestic financial system and to the financial account first take place.

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Topics:  Global economy International trade

Tags:  China, renminbi, global currency

Global Rebalancing 2.0

Linda Lim, Ronald U Mendoza 24 September 2012

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The discussion on global rebalancing is at a crossroads, and much of what will shape policy options moving forward will have to be taken up in roundtables that include more countries than the two usual suspects, China and the US.

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Topics:  Global economy

Tags:  US, global imbalances, China

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