Arbeitspapier
Exchange Rate Regime, Financial Market Bubbles and Long-Term Growth in China: Lessons from Japan
The paper argues that persistent current account surpluses and increasing foreign currency-denominated asset positions constitute long-term appreciation expectations on yuan and yen, which have made China and Japan vulnerable to U.S. interest rate cuts and appreciation expectation shocks. For both China and Japan – at different points of time – self-fulfilling runs into yuan and yen have triggered monetary policy expansions, which are identified as the breeding ground for overinvestment, speculative bubbles and post-bubble secular stagnation. To prevent a similar scenario for China capital controls, a tighter monetary policy and a fixed exchange rate regime are recommended.
- Language
-
Englisch
- Bibliographic citation
-
Series: CESifo Working Paper ; No. 5902
- Classification
-
Wirtschaft
Business Fluctuations; Cycles
Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems
Central Banks and Their Policies
- Subject
-
China
Japan
exchange rate policy
bubble economy
overinvestment
Hayek low interest rate policy
secular stagnation
capital controls
rebalancing
- Event
-
Geistige Schöpfung
- (who)
-
Schnabl, Gunther
- Event
-
Veröffentlichung
- (who)
-
Center for Economic Studies and ifo Institute (CESifo)
- (where)
-
Munich
- (when)
-
2016
- Handle
- Last update
-
10.03.2025, 11:42 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Schnabl, Gunther
- Center for Economic Studies and ifo Institute (CESifo)
Time of origin
- 2016
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