a. Download the series EXCHUS from the FRED database. This expresses the exchange rate between the yuan

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a. Download the series EXCHUS from the FRED database. This expresses the exchange rate between the yuan (one of the names for the Chinese currency) as the number of yuan per US dollar. Convert that exchange rate to the number of US cents per yuan so that we are treating China as the domestic country. Are there periods after 1994 where China maintains a fixed exchange rate?

b. Download the series RBCNBIS. This is a real exchange rate index for China that can be interpreted as the value of \(\varepsilon=\mathrm{EP} / \mathrm{P}^{*}\) for China. Is the value of the real exchange rate fixed during the period where the nominal exchange rate is fixed? Over that period, how did the value of the real exchange rate affect aggregate demand in China?

c. From July 2007 to June 2010, the value of the yuan was very close to 14. 6 US cents. This was a second period of fixed exchange rates. Can you find any evidence from the movements of the nominal and real exchange rate after June 2010 that suggest that China chose a lower value of the yuan to encourage Chinese exports and reduce Chinese imports?

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Macroeconomics

ISBN: 9780134897899

8th Edition

Authors: Olivier Jean Blanchard

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