Arbeitspapier
The structural behavior of China–US trade flows
We examine Chinese-US trade flows over the 1994-2012 period, and find that, in line with the conventional wisdom, the value of China's exports to the US responds negatively to real renminbi (RMB) appreciation, while import responds positively. Further, the combined empirical price effects on exports and imports imply an increase in the real value of the RMB will reduce China's trade balance. The use of alternative exchange rate measures and data on different trade classifications yields additional insights. Firms more subject to market forces exhibit greater price sensitivity. The price elasticity is larger for ordinary exports than for processing exports. Finally, accounting for endogeneity and measurement error matters. Hence, the purging the real exchange rate of the portion responding to policy, or using the deviation of the real exchange rate from the equilibrium level yields a stronger measured effect than when using the unadjusted bilateral exchange rate. Publication
- ISBN
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978-952-323-011-8
- Language
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Englisch
- Bibliographic citation
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Series: BOFIT Discussion Papers ; No. 23/2014
- Classification
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Wirtschaft
Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
Open Economy Macroeconomics
- Subject
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import
export
elasticity
real exchange rate
processing trade
- Event
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Geistige Schöpfung
- (who)
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Cheung, Yin-Wong
Chinn, Menzie D.
Qian, XingWang
- Event
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Veröffentlichung
- (who)
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Bank of Finland, Institute for Economies in Transition (BOFIT)
- (where)
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Helsinki
- (when)
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2014
- Handle
- Last update
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10.03.2025, 11:41 AM CET
Data provider
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Object type
- Arbeitspapier
Associated
- Cheung, Yin-Wong
- Chinn, Menzie D.
- Qian, XingWang
- Bank of Finland, Institute for Economies in Transition (BOFIT)
Time of origin
- 2014