Risk, uncertainty and China's exports
Australian Economic Papers
Wiley-Blackwell Publishing Asia
Both theoretical and empirical models were developed in this paper to examine how exporters' response to real exchange rate volatility (RERV) and real exchange rate misalignment (RERM) varies across industries in China. The theoretical model indicates that the impact of RERV depends on exporters' attitude to risk while the effect of RERM is ambiguous. Using disaggregated industry data, Chinese exporters were found to be averse to RERV and RERM. This suggests that the negative impact on China's exports resulting from a revaluation of the RMB will be mitigated by a positive impact due to the reduction of RERM.
This paper was fully supported by a grant from the Research Grants Council of the Hong Kong Special Administrative Region, China (Project No. LU3110/04H).
Copyright © Blackwell Publishing Ltd/University of Adelaide and Flinders University 2006
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Li, G., Voon, J. P., & Ran, J. (2006). Risk, uncertainty and China's exports. Australian Economic Papers, 45(2), 158-168. doi: 10.1111/j.1467-8454.2006.00284.x