Scandinavian Working Papers in Economics
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Institute for Economies in Transition, Bank of Finland BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland

No 14/2004:
Just how undervalued is the Chinese renminbi?

Michael Funke () and Jörg Rahn ()

Abstract: Given that the value of China’s currency has been hot topic recently, this paper explores the equilibrium levels of China’s real and nominal exchange rates. Employing a Johansen cointegration framework, we focus on the behavioral equilibrium exchange rate (BEER) and permanent equilibrium exchange rate (PEER) models. Our results suggest that, while the renminbi is somewhat undervalued against the dollar, the misalignment is not nearly as exaggerated as many popular claims.

Keywords: Renminbi; Yuan; China; Exchange Rate; Equilibrium Exchange Rate; (follow links to similar papers)

JEL-Codes: C32; F31; F32; F41; (follow links to similar papers)

40 pages, July 7, 2004

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This paper is published as:
Funke, Michael and Jörg Rahn, (2005), 'Just how undervalued is the Chinese renminbi?', The World Economy, Vol. 28, pages 465-489

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