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Currency Internationalization and the International Price System

Author

Listed:
  • Hailong Jin

    (South Dakota State University)

  • Wisdom Takumah

    (Emory University)

  • Josiah Jorenby

    (South Dakota State University)

Abstract

Although China, now the world’s second largest economy and largest goods trading nation, has rolled out the ambitious currency internationalization protocol while maintaining strict capital controls for nearly a decade, the implications of this unique reform path on the international economy still present uncertainties. In this paper, we fill in this gap by developing a two country, two-goods model to investigate the impacts of currency internationalization on the international price system, which consists of goods market and factor market interactions. We propose a critical condition of sustainable currency internationalization and reveal high international price sensitivity to exchange rate adjustments.

Suggested Citation

  • Hailong Jin & Wisdom Takumah & Josiah Jorenby, 2018. "Currency Internationalization and the International Price System," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 24(4), pages 303-309, November.
    • Handle: RePEc:kap:iaecre:v:24:y:2018:i:4:d:10.1007_s11294-018-9711-y
    DOI: 10.1007/s11294-018-9711-y
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    References listed on IDEAS

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