Exchange Rate Flexibility in China: Measurement, Regime Shifts and Driving Forces of Change

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• 作者：Robert Dixon ; Zhichao Zhang and Yang Dai
• 刊名：Review of International Economics
• 出版年：2016
• 出版时间：November 2016
• 年：2016
• 卷：24
• 期：5
• 页码：875-892
• 全文大小：343K
• ISSN：1467-9396

文摘

With an emphasis on government intervention that hinders market forces in currency movements, this paper presents a nuanced investigation of the degree and dynamics of flexibility in China's exchange rate regime. A high-frequency data model is developed to more accurately detect the extent to which the Chinese currency is market-driven. This indicator is then utilized in a Markov switching model to examine shifts in RMB regime flexibility. The results suggest a moderate increase in exchange rate flexibility since the 2005 reform. Additionally, two switching states are captured, and possible driving factors are discussed.