The renminbi and poor-country growth

Helmut Reisen 05 December 2011

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China’s current-account surplus over the past two decades can be explained in large part by its savings rate. Song et al (2010) have stressed the role of rising corporate savings due to reallocation within the manufacturing sector from low- to high-productivity companies. Wei (2010), meanwhile, explains China’s rising household savings with gender imbalances. Still, large appreciations do impact the current account and – in developing countries – do depress growth (Keppler et al 2011), as evidenced by data over the past 50 years.

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Topics:  Development International trade

Tags:  China, exchange-rate policy, poor countries

The price of children and fertility responses: Evidence from the Israeli Kibbutz

Avraham Ebenstein, Moshe Hazan, Avi Simhon 02 December 2011

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To what extent does economics affect fertility decisions? Ever since Gary Becker’s seminal work on the economics of the family in the 1960s (Becker 1960), economists have argued that money weighs heavily on the minds of would-be parents, and policymakers throughout the world have been heavily influenced by such research.

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Topics:  Frontiers of economic research Health economics

Tags:  France, China, fertility, demographics, Israel, population

How to agree emissions targets at Durban

Valentina Bosetti, Jeffrey Frankel 28 November 2011

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The parties to the UN Framework Convention on Climate Change will meet once again in Durban, South Africa, from 28 November to 9 December. The clock is running out on negotiations for a successor agreement to the Kyoto Protocol. Despite optimism from some (see Tol 2010), progress at Copenhagen two years ago and Cancun one year ago was slow. Negotiations have been blocked by a seemingly insurmountable obstacle.

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Topics:  Environment International trade

Tags:  US, China, Kyoto Protocol, India, UN Convention on Climate Change

Market-economy status for China is not automatic

Bernard O’Connor 27 November 2011

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In EU trade-defence law (antidumping and anti-subsidies), there is provision for different treatment between those exporting countries which are considered to have the status of being a market economy and those which are not. If a country does not have market-economy status it is easier to construct the normal value of the exported goods. The constructed normal value will normally be based on costs and prices from outside the exporting country and thus are likely to be higher.

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Topics:  Global governance International trade

Tags:  China, WTO, antidumping

Are Chinese individuals prone to money illusion?

Heleen Mees, Philip Hans Franses 20 November 2011

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China’s monetary policy and its inflation have got people talking – particularly about the effect on other countries (see for example the eBook edited by Evenett 2010). But what about its effect on China’s people? Are they fooled by money illusion?

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Topics:  Frontiers of economic research Monetary policy

Tags:  US, inflation, China, money illusion

Does openness generate growth? Reconciling the experiences of Mexico and China

Timothy Kehoe, Kim Ruhl 19 November 2011

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Does opening to international trade and foreign investment generate economic growth? A large empirical literature employs regressions with a country’s growth rate as the dependent variable and some measure of openness among the independent variables. Although some researchers find that growth is positively correlated with the share of trade in GDP, Rodríguez and Rodrik (2001) point out that the trade share is not a direct measure of policy. When the dependent variable is a measure of policy, the results are ambiguous and highly sensitive to the exact specification of the regression.

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Topics:  International finance International trade

Tags:  China, free trade, financial globalisation, openness, Mexico

The financial trilemma in China and a comparative analysis with India

Rajeswari Sengupta, Joshua Aizenman 15 November 2011

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Policymakers dealing with the Great Recession of 2008–09 are confronted with what we call the ‘financial trilemma’. This hypothesis, based on pioneering work by Mundell and Fleming in the 1960s, asserts that a country may not simultaneously target exchange-rate stability, conduct an independent monetary policy, and have full financial integration – it is a potent paradigm of open-economy macroeconomics (see Fleming 1962 and Mundell 1963).

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Topics:  Development International finance International trade

Tags:  China, India, emerging markets, exchange-rate policy, financial trilemma

China’s economic growth ‘miracle’ and its outlook by 2020

Yuhan Zhang 13 November 2011

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China’s economy has taken off since Deng Xiaoping’s economic reforms in 1978. Contrary to the conventional wisdom that China’s economic growth has been driven by exports, it is investment that actually contributes the most. China’s fixed capital formation and inventories jumped from 30% of GDP in 1980 to around 47.5% in 2010. Fixed capital formation, which corresponds to infrastructure such as factories, roads, and housing, had risen to the unprecedented high of 18.2 trillion renminbi at the end of 2010. And it is still rising.

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Topics:  Development

Tags:  growth, China

Should India join the sovereign-wealth-fund herd?

Kavaljit Singh 31 October 2011

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New Delhi will soon take a final call on the issue of setting up of a sovereign wealth fund. The idea of setting up an Indian sovereign wealth fund has been going around since 2007 when China established its major sovereign wealth fund, China Investment Corporation (CIC), with an initial capital fund of $200 billion. However, this time the proposal has received strong support from India’s corporate leaders who recently suggested the establishment of a state-owned sovereign wealth fund primarily to secure access to natural resources and pursue strategic investment opportunities overseas.

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Topics:  International finance International trade

Tags:  China, India, sovereign wealth funds

The rise of the renminbi as international currency: Historical precedents

Jeffrey Frankel 10 October 2011

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All of a sudden, the renminbi is being touted as the next big international currency. Just in the last year or two, the Chinese currency has begun to internationalise along a number of dimensions. A renminbi bond market has grown rapidly in Hong Kong, and one in renminbi bank deposits. Some of China’s international trade is now invoiced in the currency. Foreign central banks have been able to hold renminbi since August 2010, with Malaysia going first.

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Topics:  International finance

Tags:  reserve currency, China, renminbi, dollar

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