BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 23/2014:
The structural behavior of China–US trade flows
Yin-Wong Cheung ()
, Menzie D. Chinn ()
and Xingwang Qian ()
Abstract: 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.
Keywords: import; export; elasticity; real exchange rate; processing trade; (follow links to similar papers)
JEL-Codes: F12; F41; (follow links to similar papers)
37 pages, December 3, 2014
Before downloading any of the electronic versions below
you should read our statement on
copyright.
Download GhostScript
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
dp2314.pdf 
Download Statistics
Questions (including download problems) about the papers in this series should be directed to Päivi Määttä ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Programing by
Design by Joachim Ekebom
