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Analysing the Effects of RMB Appreciation on China’s Economic Growth: Stimulation or Deterioration?
Jönköping University, Jönköping International Business School, JIBS, Economics.
Jönköping University, Jönköping International Business School, JIBS, Economics.
2013 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

The main purpose of this study is to empirically analyse whether an appreciation of the Chinese currency, measured by the Real Effective Exchange Rate Index, would stimulate or deteriorate the China’s economic growth, measured by the Real Gross Domestic Product per Capita. Our study is based on a time-series sample with 52 quarterly observations covering the time period from 2000Q1 to 20012Q4, and with the help of two main regression tests, namely Ordinary Least Square (OLS) and Vector Autoregressive (VAR).

The main conclusion indicates that the RMB appreciation would exert an expansionary effect on China’s economic growth in the short run, while as time passes the expansionary effect is later replaced by a contractionary effect. However, such contrationary effect does not last long and gradually disappears in the long run. In addition, based on the results of OLS and VAR regression tests, the effects of RMB appreciation, whether expansionary or contractionary, do not reflect any strong explanatory power. Therefore, we further conclude that China’s economic growth may not be severely affected by the RMB appreciation, and we recommend that the Chinese government should allow slight and stable RMB appreciation in the near future.

Place, publisher, year, edition, pages
2013. , 40 p.
Keyword [en]
China's economic growth, real exchange rate, RMB appreciation
National Category
Economics and Business
Identifiers
URN: urn:nbn:se:hj:diva-21401OAI: oai:DiVA.org:hj-21401DiVA: diva2:627027
Subject / course
IHH, Economics
Presentation
2013-05-22, 10:40 (English)
Supervisors
Examiners
Available from: 2013-06-17 Created: 2013-06-10 Last updated: 2013-06-17Bibliographically approved

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Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
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