The Real Exchange Rate and the Structural Transformation(s) of China and the U.S.

From 1989 to 2010, the RMB–dollar real exchange rate depreciated, despite China's rapid income growth relative to the US. We develop a macroeconomic-trade model of the very long-run equilibrium RMB-dollar real exchange rate. We show that this long-run depreciation of the RMB-dollar real exchange rate can be justified by our model, if we note that Chinese agriculture has relatively low productivity and that agriculture is tradeable. Relative to our equilibrium benchmark, the current real RMB-dollar rate is, if anything, over appreciated.     

Balance-of-payments constrained growth model for the Turkish economy

Economists have investigated the relationship between output and export in order to explain economic growth for long years. Numerous studies have found very close correspondence between the growth of output and export. It is commonly known that Thirlwall's papers indicate very tight relationship between the growth of output and the ratio of the growth of exports to the income elasticity of demand for imports. This paper aims to apply Thirlwall's balance-of-payments-constrained (BPC) model for the Turkish economy for 1968–2011 period. This research also evaluates the procedures of testing Thirlwall's principle by estimation of the income elasticity of demand for imports using the test of stationarity and cointegration methods. The findings are in accordance with the Harrod–Thirlwall growth model. The test results of Johansen cointegration procedure and the comments on these results are presented as well.     

The impacts of China on economic growth: Evidence for Brazil,Chile, and Peru

This study empirically analyzes the direct impacts derived from the swift increase in exports to China (referred to as “the impact of China”) on the economic growth of three selected South American countries, Brazil, Chile, and Peru, during the commodity boom between 2001 and 2008. The results stemming from the balance-of-payments-constrained growth model suggest that the magnitude of China’s impact was less than 1 percent, although it ranged from the largest to the second largest impact among all trading partners for the three countries. The estimated balance-of-payments growth rate of domestic income is lower than the real growth rate of domestic income. This is because the growth rates of the export volumes were not sufficient even during the commodity boom, on account of the continued increasing trends of income elasticity of demand for imports. Furthermore, the income elasticities of demand for imports from China were especially high. Therefore, the three countries will continue to face further increase in the income elasticity of demand for imports as well as a stagnant growth rate of export volumes. Thus, the balance-of-payments position will continue to be the main growth constraint for these countries.     

Tourism,trade and growth: the case of Cyprus

Although the relationship between international trade and economic growth has found a wide application area in the literature over the years, this can not be said about tourism and growth or trade and tourism. This study employs the bounds test for cointegration and Granger causality tests to investigate a long-run equilibrium relationship between tourism, trade and real income growth, and the direction of causality among themselves for Cyprus. Results reveal that tourism, trade and real income growth are cointegrated; thus, a long-run equilibrium relationship can be inferred between these three variables. On the other hand, Granger causality test results suggest that real income growth stimulates growth in international trade (both exports and imports) and international tourist arrivals to the island. Furthermore, growth in international trade (both exports and imports) also stimulates an increase in international tourist arrivals to Cyprus. And finally, real import growth stimulate growth in real exports in the case of Cyprus.     

中国钢铁长期需求:影响因素与政策选择

近年来,我国钢铁工业得到了长足的发展。但随着国内外市场供求关系变化,钢铁工业供求结构不相适应的矛盾日益显现。钢铁工业要实现可持续发展,必须重视对市场长期需求规律的研究,将数量增长和产品结构调整相结合。本文利用协整方程对市场经济条件下经济增长等因素对我国钢铁工业推动作用进行动态分析,探讨钢铁市场的长期需求规律,对于当前钢铁产业政策发展导向、政策选择等提出建议。     

Mexico's Economic Growth and the Balance of Payments Constraint: A cointegration analysis

This paper applies the basic balance-of-payments constraint model (BPCmodel), developed by A.P. Thirlwall, to the analysis of Mexico's economic growth in 1950-96.With the use of unit-root tests and cointegration analysis it estimates the long-run association between the growth of Mexico's real exports and real output in 1950-96, and selected subperiods. The results tend to show significant and positive cointegration between these two variables, thus giving support to the BPC-model as a relevant hypothesis to explain Mexico's long-term economic growth. Moreover, the findings of cointegration tests for selected subperiods suggest that the slowdown in its economic growth since 1982 is associated with an increase in the long-term income elasticity of imports that made more binding the balance-of-payments constraint on the expansion of domestic output.     

Export tax refund and the misreporting by Chinese exporters

We document how Chinese exporters misreport their exports to China's customs in order to benefit from export tax refunds. We estimate the response of the logarithmic difference between the exports reported in China's customs data and the imports reported in destination countries' customs data to export tax refund rates. We find that with an increase of 1 percentage point in export tax refund rates, the logarithmic difference increases by 0.051. Additionally, with an increase of 1 percentage point in the export tax refund rates of similar products, this gap decreases by 0.024. Further study reveals that quantity manipulation accounts for the majority of the export reporting distortion.     

Exchange rate volatility and export growth in Nigeria

This article examines the impact of exchange rate volatility on Nigeria's exports to its most important trading-partner–the United States over the quarterly period January 1980 to April 2001. Using cointegration and vector error correction (VECM) framework, empirical tests indicate the presence of a unique cointegrating vector linking real exports, real foreign income, relative export prices and real exchange rate volatility in the long run. Furthermore, the results show that increases in the volatility of the real exchange rate raise uncertainty about profits to be made which exert significant negative effects on exports both in the short- and long-run. Our results also show that improvements in the terms of trade (represented by declines in the real exchange rate) and real foreign income exert positive effects on export activity. Most importantly, we found that the trade liberalization and economic reform policies implemented in the post-1986 structural adjustment period contributed to Nigeria's export performance. Overall, our findings suggest that Nigeria's exporting activities can be further boosted by policies aimed at achieving and maintaining a stable competitive real exchange rate.     

Economic growth and balance-of-payments constraint in Vietnam

Abstract

Our paper examines the long-run relation between economic growth and current account equilibrium in Vietnam, using a multicountry balance-of-payments-constrained growth model. We find that for the whole sample (1985–2010) Vietnam grew less than the rate predicted by the model. We also find that the balance-of-payments-constrained growth rate shifted after the 1997 Asian crisis. Since the relative price effect is neutral, the volume effects dominate in setting the balance-of-payments constraint. On the one hand, owing to the high income elasticities of exports, growth in advanced countries has a strong multiplier effect on the Vietnamese economy. On the other hand, this effect is hindered by a strong “appetite” for imports coming from Asia. Finally, we assess the impact of the current crisis on Vietnam’s growth for the period 2011 to 2017.     

From groundnuts to globalization: A structural estimate of trade and growth

Starting with Romer (1987) and Rivera-Batiz-Romer (1991) economists have been able to model how trade enhances growth through the creation and import of new varieties. In this framework, international trade increases economic output through two channels. First, trade raises productivity levels because producers gain access to new imported varieties. Second, increases in the number of varieties drives down the cost of innovation and results in ever more variety creation. Using highly disaggregate trade data, e.g. Gabon’ s imports of Gambian groundnuts, we structurally estimate the impact that new imports have had in approximately 4000 markets per country. We then move from groundnuts to globalization by building an exact TFP index that aggregates these micro gains to obtain an estimate of trade on productivity growth for each country. We find that in the typical country in the world, new imported varieties account for 10–25% of its productivity growth. However, when we structurally estimate the long-run impacts of these productivity growth effects, we find that import variety growth between 1994 and 2003 raised world permanent income by 17% .     

International trade and macroeconomic dynamics: The case of U.S. bilateral trade with G-7 countries

The short- and long-run effects of exchange rates, income, interest rates and government spending on U.S. bilateral trade with the other G-7 countries are investigated using an autoregressive distributed lag (ARDL) model. The primary contribution of this study is to consider separating the analysis of exports and imports in an integrated model that empirically encompasses four major schools of thoughts – elasticity, Keynesian income, absorption and monetary approaches – in order to identify macroeconomic linkages to U.S. bilateral trade with the other G-7 countries accurately. Results suggest that, in both the short- and long-run, U.S. imports and exports are highly sensitive to changes in U.S. and foreign income, while U.S. imports and exports are relatively insensitive to changes in bilateral exchange rate. It is also found that both exports and imports are more responsive to changes in government spending than changes in interest rates in both the short- and long-run.     

The engine of growth or its handmaiden?

This paper presents an analysis of time-series data for the countries in the Summers-Heston (1991) data set, in an attempt to ascertain the evidence for or against the export-led growth hypothesis. We find that standard methods of detecting export-led growth using Granger-causality tests may give misleading results if imports are not included in the system being analyzed. For this reason, our main statistical tool is the measure of conditional linear feedback developed by Geweke (1984), which allows us to examine the relationship between export growth and income growth while controlling for the growth of imports. These measures have two additional features which make them attractive for our work. First, they go beyond meredetection of evidence for export-led growth, to provide a measurement of itsstrength. Second, they enable us to determine the temporal pattern of the response of income to exports. In some cases export-led growth is a long-run phenomenon, in the sense that export promotion strategies adopted today have their strongest effect after eight to 16 years. In other cases the opposite is true; exports have their greatest influence in the short run (less than four years). We find modest support for the export-led growth hypothesis, if “support” is taken to mean a unidirectional causal ordering. Conditional on import growth, we find a causal ordering from export growth to income growth in 30 of the 126 countries analyzed; 25 have the reverse ordering. Using a weaker notion of “support”—stronger conditional feedback from exports to income than vice versa, 65 of the 126 countries support the export-led growth hypothesis, although the difference in strength is small. Finally, we find that for the “Asian Tiger” countries of the Pacific Rim, the relationship between export growth and output growth becomes clearer when conditioned on human capital and investment growth as well as import growth.     

扩大进口背景下中国进口对世界经济的影响——制造业就业的视角

伴随着中国经济的快速增长，中国在成为世界第一大出口国的同时也成为世界第二大进口国。以往对中国贸易的研究多是从供给端出发，然而从需求端来看，中国进口对世界经济的影响又有几何？本文在扩大进口战略背景下从全球制造业就业的视角对中国进口与世界经济的关系进行了实证分析，研究发现，通过对中国出口，相关国家的制造业就业实现正增长，但是两者关系会在不同贸易商品、经济发展程度和时间样本之间存在差异。在此基础上，本文进一步从就业创造和就业破坏等方面展开了机制分析。本文的研究表明，中国通过“世界市场”的角色在一定程度上降低了全球失业率，但同时也需警惕“进口竞争”对我国经济的影响。     

The Sleeping Giant Awakes: Projecting Global Implications of China's Energy Consumption

China's rapid economic growth has generated a surge in energy demand that is reallocating global fuel balances. We employ a global energy computable general‐equilibrium model to analyze alternative scenarios for economic growth, Chinese currency appreciation, and oil price shocks, with a special focus on China energy markets. Imports from the Middle East, Central Asia, Russia, and Sub‐Saharan Africa are found to comprise a growing share of China's energy. Imports to China grow from 12% of world energy imports in 2010 to 17% by 2050 when over 80% of China's oil demand will be imported.     

An empirical investigation of the causal relationship between openness and economic growth in China

This study investigates the causal relationship between openness and economic growth in China. The integration and cointegration properties of the data are analysed and the models of Granger, Sims, Geweke and Hsiao are used to identify a bi-directional causal relationship between GNP and exports plus imports. This bi-directional causation is consistent with China's development strategy of protected export promotion     

Foreign direct investment, regional market conditions and regional development

This paper uses regional panel data to investigate the mechanism whereby foreign direct investment (FDI) has contributed to China's regional development through quantifying regional marketization levels. It is found that FDI inflow generates a demonstration effect in identifying regional market conditions for investment in fixed assets and hence affects industrial location. In addition, its effects on regional export and regional income growth have varied across east, central and west China since the second half of the 1990s, depending on differences in FDI orientation between different regions. In east China, geographical advantage in exports attracts FDI inflow and FDI promotes exports. In addition, the rise of the FDI–GDP ratio increases east China's share in national industrial value added. These effects contribute positively to regional income growth in east China although there is a direct crowding‐out effect between FDI and domestic investment (as input) in growth. In contrast, the negative impact of FDI inflow on regional export orientation in central China weakens its contribution to regional income growth. Furthermore, the contribution of the improvement in the market mechanism to regional development is evidenced in attracting FDI, in promoting export and directly contributing to regional income growth.     

Stability of money demand function revisited in China

As China's economic reforms have undergone significant structural changes after 1979, it has been rather difficult to formulate a stable money demand function over the period following that year. While previous literature on the long-run relationship of money demand in China shows the existence of stable money demand, this article revisits the stability of the China money demand function over the period after 1979. To employ the unit root tests and the cointegration tests with structural break, the empirical evidence demonstrates that economic and financial deregulation did affect the stability of demand for money in China over the period 1977 to 2002. Moreover, the estimated long-run income and interest elasticity are respectively 1.01 (1.11) and ?0.14 (?0.08) using the real M1 (M2) equation. In addition, real income and the interest rate are found to be weakly exogenous. We overall do find structural breakpoints mainly in 1980 and 1993, and they look to match clearly with corresponding critical financial and economic incidents.     

Estimating the import demand function for China

This paper estimates the import demand elasticity for China using three fully efficient cointegrating regressions and the autoregressive distributed lag (ARDL) method. This paper is the first to accommodate the perception of global risk in an investigation of the information transmission mechanism between the relationship import demand and its determinants in China. The empirical results show that real imports are cointegrated with domestic economic activity, real effective exchange rate, and the perception of global risk. Domestic income is found to have a significantly positive effect on imports. Contrary to theory, the real effective exchange rate carries negative coefficients, which suggests that a decrease in external competitiveness (appreciation) will decrease the level of imports in the case of China. One of the reasons for this may be the tied anti-dumping duty on some import items. Since the perception of global risk adversely affects China's aggregated imports, policy-makers should consider the degree to which the perception of global risk affects the implementation of trade policies.     

The Impact of Chinese Exports on Global Import Prices*

This paper evaluates the evidence bearing on the question of whether China's buoyant export growth has led to significant changes in the import prices, and thus inflation performance, of its trading partners. This evidence suggests that the impact of Chinese exports on global import prices has been, while non‐ negligible, fairly modest. We identify a statistically significant effect of US imports from China on US import prices, but given the size of this effect and the relatively low share of imports in US GDP, the ultimate impact on US consumer prices has likely been quite small. Moreover, imports from China had little apparent effect on US producer prices. Finally, using a multi‐country database of trade transactions, we estimate that, since 1993, Chinese exports lowered annual import inflation in a large set of economies by 0.25 percentage point or less on average.     

Does the exchange rate matter to bilateral trade between Korea and Japan? Evidence from commodity trade data

This study examines the short- and long-run effects of exchange rate changes on trade flows in the context of disaggregating industry data of bilateral trade between Korea and Japan. For this purpose, an autoregressive distributed lag (ARDL) approach is used. Results show that Korea's exports and imports are relatively sensitive to the bilateral exchange rate in the short-run, but less responsive in the long-run. It is also found that income in the two countries has significant impacts on the bilateral trade flows in both the short- and long-run. Finally, exchange rate uncertainty and Japanese FDI to Korea are found to have little impacts on Korea's trade with Japan in the short- and long-run.