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The Two-Pillar Policy for the RMB from December 2015 to May 2017
Urban J. Jermann, Bin Wei, Vivian Yue, Aug 16, 2017We document that since December 2015 the People’s Bank of China (PBC) has followed a “two-pillar” exchange rate policy that aims to achieve both stability and flexibility. Based on a no-arbitrage model and options price data we estimate the credibility of the policy as well as its impact on the RMB/USD exchange rate. The model was able to correctly forecast the end of the two-pillar policy in May 2017.
Bilateral Trade and Shocks in Political Relations: Evidence from China
Yingxin Du, Jiandong Ju, Carlos D. Ramirez, Xi Yao, Mar 14, 2018To what extent do political relations between countries affect their economic exchange? Using evidence of China’s relations with other major powers during the period of 1990 to 2013, Yingxin Du, Jiandong Ju, Carlos D. Ramirez, and Xi Yao point out the time-aggregation bias in the existing empirical research and provide insights on the relationship between political shocks and trade.
Regional Variation of GDP per Head within China, 1080–1850: Implications for the Great Divergence Debate
Stephen Broadberry, Hanhui Guan, Sep 28, 2022We provide the first regional breakdown of GDP per head for China from the Song dynasty to the Qing, so that regions of similar size can be compared between Europe and Asia to establish the timing of the Great Divergence of living standards.
China’s Producer Price Reflation in 2016–2017: Capacity Cuts or Recovering Aggregate Demand?
Linxi Chen, Ding Ding, Rui C. Mano, Nov 23, 2018In late 2015, the Chinese government launched a multi-year plan to reduce capacity in the coal and steel industries. Around the same time, producer price inflation in China started to pick up strongly after being trapped in negative territory for 4½ years. What is behind this broad reflation—cuts in coal and steel capacity or a strengthening of aggregate demand...
Faking Trade for Capital Control Evasion: Evidence from Dual Exchange Rate Arbitrage in China
Renliang Liu, Liugang Sheng, Jian Wang, Nov 25, 2020We examine whether firms over-report international trade to evade capital controls for foreign exchange arbitrage, by specifically testing whether the aggregate bilateral trade data gap between trading partners is positively (negatively) correlated with the exchange rate spread when the spread is positive (negative). At the disaggregated level, we also employ Benford’s law to detect trade data manipulations...
