China's Exchange Rate Impasse and the Weak U.S. Dollar
Stanford University, School of Humanities & Sciences, Department of Economics (deceased); CESifo (Center for Economic Studies and Ifo Institute for Economic Research) (deceased)
University of Leipzig - Institute for Economic Policy
CESifo Working Paper Series No. 2386
Since 2004, China has been backed into a situation where the renminbi is expected to go ever higher against the dollar, and this one-way bet has led to a loss of domestic monetary control. Combined with a more general flight from the U.S. dollar, the resulting monetary explosion in China contributes to the worldwide increase in primary commodity prices - with excess liquidity reminiscent of the global inflation generated by the weak dollar in the 1970s.
Number of Pages in PDF File: 28
Keywords: inflation, exchange rates, macro policies, current account imbalances
JEL Classification: E31, E61, F31
Date posted: September 9, 2008
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