TY - JOUR
T1 - The overvaluation of Renminbi undervaluation
AU - Cheung, Yin-Wong
AU - Chinn, Menzie D.
AU - Fujii, Eiji
PY - 2007/9
Y1 - 2007/9
N2 - We evaluate whether the Renminbi (RMB) is misaligned, relying upon conventional statistical methods of inference. A framework built around the relationship between relative price and relative output levels is used. We find that, once sampling uncertainty and serial correlation are accounted for, there is little statistical evidence that the RMB is undervalued, even though the point estimates usually indicate economically significant misalignment. The result is robust to various choices of country samples and sample periods, as well as to the inclusion of control variables. © 2007 Elsevier Ltd. All rights reserved.
AB - We evaluate whether the Renminbi (RMB) is misaligned, relying upon conventional statistical methods of inference. A framework built around the relationship between relative price and relative output levels is used. We find that, once sampling uncertainty and serial correlation are accounted for, there is little statistical evidence that the RMB is undervalued, even though the point estimates usually indicate economically significant misalignment. The result is robust to various choices of country samples and sample periods, as well as to the inclusion of control variables. © 2007 Elsevier Ltd. All rights reserved.
KW - Absolute purchasing power parity
KW - Capital controls
KW - Currency misalignment
KW - Exchange rates
KW - Real income
UR - http://www.scopus.com/inward/record.url?scp=34250164630&partnerID=8YFLogxK
UR - https://www.scopus.com/record/pubmetrics.uri?eid=2-s2.0-34250164630&origin=recordpage
U2 - 10.1016/j.jimonfin.2007.04.005
DO - 10.1016/j.jimonfin.2007.04.005
M3 - RGC 21 - Publication in refereed journal
SN - 0261-5606
VL - 26
SP - 762
EP - 785
JO - Journal of International Money and Finance
JF - Journal of International Money and Finance
IS - 5
ER -