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Real exchange rate and economic growth in China

Author

Listed:
  • Ping Hua

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique)

Abstract

By proposing a real exchange rate augmented Cobb-Douglas production function, it is demonstrated that the real exchange rate exerts multiple effects on economic growth. If a real appreciation has negative effects on growth by deteriorating international competitiveness in the tradable sector and by causing job losses, at the same time it exercises positive effects on economic growth by favoring capital intensity, human capital and by exerting pressure for efficiency improvements. The function is estimated by using the GMM system estimation approach and a panel data for the 29 Chinese provinces over the period from 1987 to 2008. The results show that the real exchange rate appreciation had a negative effect on economic growth, which was more marked in coastal provinces than in inland provinces, contributing to a reduction in the difference in GDP per capita between the two kinds of provinces.

Suggested Citation

  • Ping Hua, 2012. "Real exchange rate and economic growth in China," Post-Print halshs-00772517, HAL.
    • Handle: RePEc:hal:journl:halshs-00772517
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    Cited by:

    1. Sebri, Maamar, 2015. "Use renewables to be cleaner: Meta-analysis of the renewable energy consumption–economic growth nexus," Renewable and Sustainable Energy Reviews, Elsevier, vol. 42(C), pages 657-665.
    2. Ping Hua, 2020. "Real Exchange Rates and Manufacturing Industry in China," Post-Print hal-03041506, HAL.
    3. Achouak Barguellil, 2021. "The Asymmetric Indirect Impact of Real Exchange Rate on Economic Growth through Foreign Trade: An Asymmetric ARDL Panel Model," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 11(8), pages 658-671, August.

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