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Exchange rate reform and its inflationary consequences: an empirical analysis for China

Exchange rate reform and its inflationary consequences: an empirical analysis for China
Exchange rate reform and its inflationary consequences: an empirical analysis for China
In examining China's exchange rate policy in the reforming years, the study finds empirical evidence of its long-run inflationary consequences, but the effects appear not to be sizable. In the short run, while changes in the devaluation rate are positively correlated with the increase in the growth rate of inflation, the inflation inertia is also modest. The moderate inflationary cost of devaluations provides some explanation of the smooth transition of exchange rate policy regime in China and the authorities' ability to put more weight on external competitiveness.
0003-6846
189-199
Lu, Maozu
f20c88e0-3bba-419d-a6a8-79f68f821095
Zhang, Zhichao
7a646262-463c-4035-b69b-beb5586b3209
Lu, Maozu
f20c88e0-3bba-419d-a6a8-79f68f821095
Zhang, Zhichao
7a646262-463c-4035-b69b-beb5586b3209

Lu, Maozu and Zhang, Zhichao (2003) Exchange rate reform and its inflationary consequences: an empirical analysis for China. Applied Economics, 35 (2), 189-199. (doi:10.1080/0003684022000017575).

Record type: Article

Abstract

In examining China's exchange rate policy in the reforming years, the study finds empirical evidence of its long-run inflationary consequences, but the effects appear not to be sizable. In the short run, while changes in the devaluation rate are positively correlated with the increase in the growth rate of inflation, the inflation inertia is also modest. The moderate inflationary cost of devaluations provides some explanation of the smooth transition of exchange rate policy regime in China and the authorities' ability to put more weight on external competitiveness.

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Published date: 2003

Identifiers

Local EPrints ID: 33426
URI: https://eprints.soton.ac.uk/id/eprint/33426
ISSN: 0003-6846
PURE UUID: 09fba815-2feb-45a7-b40f-cf2403f50691

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Date deposited: 16 May 2006
Last modified: 17 Jul 2017 15:52

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