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The US-China Trade Imbalance: Will Revaluing the RMB Help (Much)?

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  • Nicolaas Groenewold

    (UWA Business School, University of Western Australia)

  • Lei He

    (UWA Business School, University of Western Australia)

Abstract

The large US-China trade imbalance is a common cause for concern and regularly blamed on the undervaluation of the RMB. We estimate a simple model of the trade balance and simulate the long-run effects on the trade balance of RMB revaluations in the range of 10-50%. We find that improvements in the trade balance following plausible revaluations are likely to be modest.

Suggested Citation

  • Nicolaas Groenewold & Lei He, 2006. "The US-China Trade Imbalance: Will Revaluing the RMB Help (Much)?," Economics Discussion / Working Papers 06-27, The University of Western Australia, Department of Economics.
    • Handle: RePEc:uwa:wpaper:06-27
    as

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    References listed on IDEAS

    as
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