@techreport{Sell2006Exchange,
abstract = {In this paper, we discuss the new aspects of exchange rate policy which can be observed in the emerging
market economies and their most likely implications for allocation, distribution and stabilization
goals. A special emphasis is put on the Chinese case, where large interventions in the foreign
exchange market point at a significant undervaluation of the Renminbi. With many alternatives at
choice, Chinese authorities still prefer to peg their currency, by and large, to the US-Dollar. On July
21, 2005 a moderate revaluation and the introduction of a basket peg was announced, but a basket
peg strategy is not yet visible in empirical figures. On the background of Germany's experiences of
1969, almost on the eve of the Bretton Woods' system collapse, we model a speculative attack on
an undervalued currency in the vein of the Flood-Garber seminal paper from 1984. The contents of
the model are reflected against today's reality in China, but also against Germany's experiences in
the past century. We come to the conclusion, quite in line with Germany's experience of 1969, that
the monetary authorities in China should anticipate such an attack and quickly proceed to a revaluation
of the Renminbi. We then propose a sequence of reforms/policies which should be implemented
in the aftermath.},
author = {Friedrich L. Sell},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {O23; E58; F31; 330; Absorption Emerging markets economies; exchange rate policy; speculative attack; first generation models},
language = {eng},
number = {2006,2},
title = {The New Exchange Rate Policy in the Emerging Market Economies: with Special Emphasis on China},
type = {Diskussionsbeitr\"{a}ge / Institut f\"{u}r Volkswirtschaftslehre, Universit\"{a}t der Bundeswehr M\"{u}nchen},
url = {http://hdl.handle.net/10419/23031},
year = {2006}
}
