Assessments of a country's real exchange rate relative to its 'equilibrium' value as suggested by 'fundamental' determinants have received increasing attention. Using China as an example, the present paper illustrates models commonly used to derive equilibrium real exchange rate estimates. The...

Although theory suggests that the real exchange rate should depreciate after a credible trade liberalization but could appreciate temporarily with a noncredible one, little empirical evidence exists. Unlike existing studies that use either indirect tests or unreliable openness measures, this...

Although theory suggests that the real exchange rate should depreciate after a permanent trade liberalization but could appreciate temporarily with a transitory one, little empirical evidence exists. Unlike existing studies that use either indirect tests or openness measures that could be...

Increased attention is being paid to assessments of the actual values of countries' real exchange rates relative to their 'equilibrium' values as suggested by 'fundamental' determining factors. This paper assesses the robustness of alternative approaches and models commonly used to derive...

The number of studies attempting to estimate the 'equilibrium' real value of China's currency has proliferated in recent years as the country's presence in world markets has grown. These studies have sought to establish whether or not a significant part of China's competitive prowess can be...

Although theory suggests that the real exchange rate should depreciate after a credible trade liberalization but could appreciate temporarily with a noncredible one, little empirical evidence exists. Unlike existing studies that use either indirect tests or unreliable openness measures, this...

This paper uses the standard one-sector neoclassical growth model to investigate why China’s consumption has been low and investment high. This paper looks into the role played by the financial sector in the growth process of China and India. [WP No. 224].

This paper uses the standard one-sector neoclassical growth model to investigate why China's consumption has been low and investment high. It finds that the low cost of capital has been quantitatively an important factor. Theory predicts that the price of capital may have been significantly...

This paper constructs a general equilibrium model with monopolistically competitive firms and endogenous markups where government spending consists of both consumption and investment goods. It is shown that when markups are countercyclical, an increase in the share of investment goods in total...