Macroeconomic Policy, Exchange Rate Regimes and Economic Growth

China has been keeping high economic growth rate since it carried out managed floating exchange rate regimes in 1994, while now begins to face retrenchment pressure brought by the depression of internal and external economy. The establishment of RMB exchange rate regime should take account of the validity of macroeconomic policy, macroeconomic growth and the regional internationalization of RMB.     

Inflation Under Alternative Exchange Rate Regimes: What Happens When Countries Differ in Size?

A three-country model is used to analyze how country size affects inflation under different exchange rate regimes. Two countries, an anchor country (leader) and a pegging country (follower), are examined where the latter differs in size. We find that the leader's preference for floating over pegging is unaffected by the follower's size except in the case where the follower is very small. However, as the follower gets smaller, the leader's inflation worsens under floating but improves under the single-currency peg. For the follower, as it gets smaller, its inflation performance improves when it floats its currency. But which regime is preferred is unclear.     

Services Policy Reform and Economic Growth in Transition Economies

Major changes have occurred in the structure of former centrally planned economies, including a sharp rise in the share of services in GDP, employment, and international transactions. However, large differences exist across transition economies with respect to services intensity and services policy reforms. We find that reforms in policies toward financial and infrastructure services, including telecommunications, power, and transport, are highly correlated with inward FDI. Controlling for regressors commonly used in the growth literature, we find that measures of services policy reform are statistically significant explanatory variables for the post-1990 economic performance of transition economies. These findings suggest services policies should be considered more generally in empirical analyses of economic growth. JEL no. F14, F43, O14, O40     

Risk Related Non Linearities in Exchange Rates: Evidence from a Panel of Central and Eastern European Countries

This paper investigates the recent evolution of five Eastern European exchange rates. Our aim is twofold: to provide an up-to-date view of the predictability and main relations of spot rates with economic fundamentals and to derive some considerations about exchange rate regimes, capital flows, and risk appetite. We propose a non-linear specification where the non-linearity refers to the effect of the interest rate differential. The paper supports the view that given the relevance of capital flows and their sensitivity to risk adjusted yield differentials, the choice of exchange rate regime should be a matter of careful strategy.     

The Swedish real exchange rate under different currency regimes

This paper presents evidence on the behaviour of the Swedish real exchange rate relative to Germany under different currency regimes during the period 1973:1–2001:4. The results suggest that the real exchange rate is cointegrated with Swedish and German productivity, which is consistent with Balassa (1964) and Samuelson (1964). In the short run, the exchange rate regime has mattered for the dynamics of the real exchange rate. Deviations from long-run equilibrium have been adjusted more quickly when the nominal exchange rate has been allowed to float freely. JEL no. C22, E31, F41     

Real currency appreciation in accession countries: Balassa-Samuelson and investment demand

The Balassa-Samuelson effect is often seen as the prime explanation of the continuous real appreciation of Central and East European (CEE) transition countries' currencies against their western counterparts. A simple model shows that productivity shocks work not only through a Balassa-type supply channel but also through an investment demand channel. Therefore, empirical evidence apparently in favour of Balassa-Samuelson effects may require a re-interpretation. The model is estimated for a panel of CEE countries. The results are consistent with the model palusibly explain the observed real appreciation and support the existence of the proposed investment demand channel. JEL no. F31, F41, C33 The paper represents the author's personal opinions and does not necessarily reflect the views of the Deutsche Bundesbank.     

基于汇率错位视角的人民币汇率制度转换概率研究

本文基于汇率错位的视角,运用二元模型对东南亚6国汇率错位幅度与汇率制度转换概率的关系进行实证分析。在此基础上,对人民币汇率制度的转换概率进行研究。得出结论:人民币汇率水平的高低与汇率制度的稳定性有很强的关系,即人民币汇率错位幅度与汇率制度转换概率呈现明显的正相关关系。汇率错位是汇率制度转换的原因,汇率错位幅度越大,汇率制度转换的概率越大。因此,若要维持人民币汇率制度的稳定,保持人民币汇率水平的基本稳定至关重要。就当前来说,人民币汇率制度发生转换的概率不大。     

Dynamic Transition of Exchange Rate Regime in China

Thepaper considers the optimal transition path for China＇s exchange rate regime. How can China successfully make the shift from the current dollar peg regime to a more desirable regime, whether a basket peg or a floating regime？ To answer this question, we develop a dynamic small open economy general equilibrium model. We construct four transition policies based on a basket peg or a floating regime and compare the welfare gains of these policies relative to maintaining the dollar peg regime. Two main results are derived from the quantitative analysis using Chinese data from 1999Q1 to 2010Q4. First, following a gradual adjustment to a basket peg regime is the most appropriate path for China to take, with minimal welfare losses associated with the shift in the exchange rate regime. Second, a sudden shift to the basket peg is the second best solution, and is superior to a sudden shift to floating because the monetary authority can efficiently determine optimal weights to attach to currencies in the basket to achieve policy goals once they adopt a basket peg regime.     

The Viability of Fixed Exchange Rate Commitments: Does Politics Matter? A Theoretical and Empirical Investigation

This article studies the connection between political instability and the sustainability of an exchange rate regime. A model based on the credibility of monetary policy shows that political unrest should be correlated with the adoption of flexible exchange rates. That intuition is tested using various measures of political instability on a panel of 125 countries between 1980 and 1994.     

The Importance of the Exchange Rate Regime in Limiting Misalignment

This paper explores how the choice of a country’s exchange rate regime may affect exchange rate misalignment for developing and developed countries. A measure of misalignment is obtained by using a panel cointegration vector estimator. This paper finds that for developing countries, an intermediate exchange rate regime (a regime falling somewhere between a pure float and a hard peg) is most effective in preventing exchange rate misalignment. Additionally, the choice of an exchange rate regime as a means to limit misalignment matters for developing countries, but does not seem to matter for developed countries.     

Exchange Rate Regime and Demand for Reserves: Evidence from Kenya,Mexico and Philippines

This paper empirically investigates the demand for international reserves (and foreign exchange reserves) during fixed and floating exchange rates periods in three developing countries: Kenya, Mexico and Philippines. Based on theoretical models, three factors are identified as important for the demand of international reserves and foreign reserves: average propensity to import, volume of imports and variability of reserves. The paper employs the cointegration methodology and error correction method to investigate the relationships. Cointegration tests results indicate a reliable long-run stationary relationship between the international reserves (and foreign exchange reserves) and the stated explanatory variables across countries and sub-periods of fixed and clean float. The error correction results indicate causality from the explanatory variables to the reserves during both the short and long run. This is true during both the fixed and the floating periods.

The dollar as an official reserve currency under EMU

This article analyzes official reserve-holding behavior in EU countries to assess the effect EMU might have on holdings of dollar reserves. Based on earlier research and new estimates, a wide range of projections is presented for the effect of EMU on the overall demand for reserves and their currency composition. It is argued that official dollar holdings could decline on the order of 35% or more from current dollar holdings, although the range of uncertainty is quite large. The contributions of country-specific factors appear to swamp the systematic components that had been isolated in earlier research.     

Procyclical Productivity and Output Growth in China: An Econometric Analysis

This paper analyzes the procyclical behavior of Chinese Total Factor Productivity (TFP). It shows that measured Solow residuals are correlated to the growth rate of real imports per worker and to other macroeconomic variables that fluctuate at cyclical frequencies. The magnitude of the trend shift in TFP after the start of economic reforms in 1978 is found to be robust to the introduction of cyclical factor utilization and other systematic influences on productivity. The propagation mechanisms of macroeconomic shocks to output are also evaluated on the basis of a seven-variable VAR system. The empirical results indicate that the growing openness of the economy has contributed to sustaining the observed long run productivity increases and has raised spatial inequality.     

The Information Contents of Aggregated Money Demand in the EMU

Estimates of aggregated and disaggregated demand-for-money functions in 7 EMU member states show that the aggregated function slightly outperforms the disaggregated functions in explaining the European demand for M3. The aggregated function appears to contain some additional information on money demand in The Netherlands and, to a lesser extent, in France. For the other countries investigated in this study information on aggregated European money demand does not add much to the explanation of demand for money in the individual countries.     

The Impact of EMU on Inflation Expectations

This paper analyses the impact of the monetary regime change from the Bundesbank to the ECB on inflation expectations. In the theoretical part, the Barro-Gordon model is used to derive the potential effect of a new central bank on inflation and inflation expectations. The econometric investigation is based on a flexible specification of expectation formation which allows both for rational and adaptive elements. The results indicate that the monetary regime change did not have a strong and lasting impact on the formation of inflation expectations and that the credibility of both central banks is not perceived to differ significantly anymore. JEL Classification Numbers: E 58, E 31     

经济转型与包容性增长的关联度

包容性增长是时代发展的必然要求,体现了公平与正义的科学内涵,是一种理想的经济发展方式。在经济转型深化阶段,中国经济社会问题的解决迫切需要以包容性增长理念为引导,将经济转型、政治转型、社会转型、文化转型等多种转型相互融合与协同推进,切实转变经济发展方式,才能实现国民经济的持续良好发展。     

Monetary Convergence and Risk Premiums in the EU Accession Countries

This study examines the impact of various monetary policy regimes on the ability to lower inflation and exchange rate risk premiums in the EU accession countries as they undergo monetary convergence to the eurozone. It proposes a monetary policy framework of flexible targeting of relative inflation risk premium that is believed to be credible and useful for managing these two categories of risk. A model of inflation and exchange rate risk premiums within the context of inflation targeting is developed. Recent trends in these risk premiums in Hungary, the Czech Republic and Poland are tested by employing the threshold ARCH (TARCH) model.     

The Collapse of the ‘New EMS’: An Interpretation

Existing theoretical models cannot explain the following features of the EMS and its crisis in 1992: its progressive hardening from 1987 onwards; the fact that credibility was shared the progressive deterioration of credibility after the first Danish referendum without changes in the economic fundamentals. This paper argues that the reason lies in the fact that the literature has not accounted for the changes in the perceived prospects of EMU. We show that an adjustable peg regime that incorporates these prospects can explain the three features listed above.     

“三元悖论”与人民币汇率制度选择

“三元悖论”从宏观上揭示货币政策独立性、汇率稳定、资本自由流动三大金融目标之间的相互制衡关系, 是汇率制度选择问题的一个基本理论分析工具。我国现行的汇率制度实质上是钉住美元的固定汇率制,在金融进一步开放的背景下,其弊端日益凸现,改革现行的汇率制度势在必行。我国现实经济条件决定了我国汇率制度改革的近期目标只能是建立汇率目标区,长期目标则是建立浮动汇率制。