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Exchange Rate Misalignments: Historical Experience of Japan, Germany, Singapore and Taiwan Compared to China Today

Author

Listed:
  • Duo Qin

    (Queen Mary, University of London)

  • Xinhua He

    (Chinese Academy of Social Sciences)

  • Yimeng Liu

    (Beijing Normal University)

Abstract

This is a comparative study on the historical experience of real effective exchange rate (REER) misalignment of Japanese yen, Deutsche mark, Singapore dollar and Taiwan dollar, with regard to the recent dispute over the Renminbi (RMB) valuation. Panel-based misalignment estimates of the four economies show that net foreign asset build-up does not necessarily result in currency misalignment, and the recent misalignment of RMB is not unprecedented in terms of magnitude, duration or currency coverage, whereas volatility in REER misalignment is likely to propagate to inflation of the home economy concerned. The assertion of 'RMB rate manipulation' thus lacks empirical support.

Suggested Citation

  • Duo Qin & Xinhua He & Yimeng Liu, 2010. "Exchange Rate Misalignments: Historical Experience of Japan, Germany, Singapore and Taiwan Compared to China Today," Working Papers 667, Queen Mary University of London, School of Economics and Finance.
    • Handle: RePEc:qmw:qmwecw:667
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    File URL: https://www.qmul.ac.uk/sef/media/econ/research/workingpapers/2010/items/wp667.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    REER misalignment; RMB; Yen; D-mark; Singapore dollar; Taiwan dollar;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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