IMF Working Papers

The Dynamics of Real Interest Rates, Real Exchange Rates and the Balance of Payments in China: 1980-2002

By Zhongxia Jin

April 1, 2003

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Zhongxia Jin. The Dynamics of Real Interest Rates, Real Exchange Rates and the Balance of Payments in China: 1980-2002, (USA: International Monetary Fund, 2003) accessed November 2, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Based on China's experience between 1980 and 2002, a cointegrated vector autoregression model was established to explore the relationships among real interest rates, real exchange rates and balance of payments in China. Taking into account institutional changes, the empirical study shows that significant and usually non-monotonic interactions exist between these three variables. The paper discusses theoretical and policy implications of the empirical result.

Subject: Central banks, Exchange rate arrangements, Exchange rates, Financial services, Foreign exchange, International reserves, Real effective exchange rates, Real exchange rates, Real interest rates

Keywords: China, Discussed exchange rate policy, Equilibrium exchange rate, Exchange rate arrangements, Exchange rate system, Exchange Rates, Interest Rates, International reserves, Managed float, Misalignment in China, Nominal exchange rate, Real exchange rates, Real interest rate differential, Real interest rates, Single-equation approach, Swap market, WP

Publication Details

  • Pages:

    28

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2003/067

  • Stock No:

    WPIEA0672003

  • ISBN:

    9781451848922

  • ISSN:

    1018-5941