The Relationship Between the Real Exchange Rate and Balance of Payments: Empirical Evidence for China from Cointegration and Causality Testing
Author(s)
Narayan, Paresh
Smyth, Russell
Griffith University Author(s)
Year published
2004
Metadata
Show full item recordAbstract
This article examines the relationship between the renminbi real exchange rate and China's foreign exchange reserves using cointegration and Granger causality testing. The main findings are that in the long run foreign exchange reserves Granger cause the real exchange rate. Meanwhile, in the short run there is unidirectional Granger causality running from foreign exchange reserves to the real exchange rate.This article examines the relationship between the renminbi real exchange rate and China's foreign exchange reserves using cointegration and Granger causality testing. The main findings are that in the long run foreign exchange reserves Granger cause the real exchange rate. Meanwhile, in the short run there is unidirectional Granger causality running from foreign exchange reserves to the real exchange rate.
View less >
View less >
Journal Title
Applied Economics Letters
Volume
11
Subject
Public Health and Health Services
Applied Economics
Banking, Finance and Investment