Do Hong Kong SAR and China Constitute An Optimal Currency Area? An Empirical Test of the Generalized Purchasing Power Parity Hypothesis PDF Download
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Author: Ms.Hong Liang
Publisher: International Monetary Fund
ISBN: 1451850182
Category : Business & Economics
Languages : en
Pages : 18
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Book Description
The paper explores the behavior of the long-run real exchange rate (RER) of Hong Kong SAR and China by testing the generalized-purchasing power parity hypothesis (G-PPP). The hypothesis argues that if the fundamental variables determining RERs are sufficiently integrated, as in a currency area, the RERs should share common trends. The findings of this study suggest (1) at present, Hong Kong SAR and China do not satisfy the conditions necessary for forming an optimal currency area by themselves; (2) when Japan and the United States are added to the group, common trends can be found; and (3) the long-run elasticity between the RERs of Hong Kong SAR and China is negative.
Author: Ms.Hong Liang
Publisher: International Monetary Fund
ISBN: 1451850182
Category : Business & Economics
Languages : en
Pages : 18
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Book Description
The paper explores the behavior of the long-run real exchange rate (RER) of Hong Kong SAR and China by testing the generalized-purchasing power parity hypothesis (G-PPP). The hypothesis argues that if the fundamental variables determining RERs are sufficiently integrated, as in a currency area, the RERs should share common trends. The findings of this study suggest (1) at present, Hong Kong SAR and China do not satisfy the conditions necessary for forming an optimal currency area by themselves; (2) when Japan and the United States are added to the group, common trends can be found; and (3) the long-run elasticity between the RERs of Hong Kong SAR and China is negative.
Author: Shu-ki Tsang
Publisher:
ISBN:
Category :
Languages : en
Pages : 27
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Book Description
After the political unification of Hong Kong with China, Hong Kong is supposed to function as a separate economic entity under the framework of one country, two systems. However, the increasingly close ties between the two economies, particularly in recent years, have raised the possibility of full economic integration despite political constraints, and even of monetary union as the Chinese currency progresses towards full convertibility. This paper employs the theory of optimum currency area (OCA) and adopts two techniques over a range of economic variables to test whether Mainland China and Hong Kong constitute an OCA. The historical results presented in this paper are very sceptical of a positive answer. Empirical findings based on disaggregated data show some signs of nominal and real convergence only between Hong Kong and parts of Eastern China, driven by trade. This seems to be consistent with the actual trajectory of economic integration. However, all other results, even those based on higher frequency price data, point to a lack of evidence that Hong Kong and Mainland China as a whole as yet constitute an OCA.
Author: Yue Ma
Publisher:
ISBN:
Category : Foreign exchange rates
Languages : en
Pages : 33
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Author: George Jian-Rum Huang
Publisher:
ISBN:
Category : China
Languages : en
Pages : 166
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Author: Chee Heong Quah
Publisher:
ISBN:
Category : East Asia
Languages : en
Pages : 372
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Author: Barry Julian EICHENGREEN
Publisher:
ISBN:
Category : East Asia
Languages : en
Pages : 44
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Author: Sau-San Chan
Publisher:
ISBN: 9781374772014
Category :
Languages : en
Pages :
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This dissertation, "Choosing an Exchange Rate Regime for a Sub-national Economy From an Optimum Currency Area Perspective: the Caseof Hong Kong" by Sau-san, Chan, 陳守信, was obtained from The University of Hong Kong (Pokfulam, Hong Kong) and is being sold pursuant to Creative Commons: Attribution 3.0 Hong Kong License. The content of this dissertation has not been altered in any way. We have altered the formatting in order to facilitate the ease of printing and reading of the dissertation. All rights not granted by the above license are retained by the author. DOI: 10.5353/th_b3123558 Subjects: Currency question - China - Hong Kong Foreign exchange rates - China - Hong Kong
Author:
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Author: Sau San Chan
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Hong Kong is a unique case in the world history of exchange systems. As a territory under British administration for more than 150 years, it has maintained a floating exchange rate relationship with its sovereignty power in a separate currency area for more than a century. This exchange arrangement once existed with a peculiar institutional setting that the government had no control over the monetary base. In the post-1997 era, the survival of this "one country, two currencies" model depends on whether the authorities will continue to allow the HK dollar to float against the Renminbi. Based on the theory of optimum currency areas, this paper, with the ultimate objective to identify the optimal choice of exchange rate regime for HK, explores the economic rationale behind these interesting phenomena. The two inter-related issues--the choice of fixed versus floating exchange rate regimes and the optimal target of link currency--are addressed. It is argued that the structural characteristics and the development of monetary institutions have been the crucial determinants of the optimal exchange system for the sub-national economy. Our findings provide new interpretations regarding the monetary crisis in October 1983 and the monetary reforms since July 1988 and delineate policy implications for the exchange arrangements before and after 30 June 1997. It is suggested that HK should stay in the U.S. currency area, which has a floating exchange rate relationship with the currency area of the Territory's sovereignty power. The "one country, two currencies" model should be intact as long as the structural characteristics of HK remain unchanged. This paper also adds value to the empirical studies of optimum currency areas, which have been dominated traditionally by the verification of the diversified choices between fixed and floating exchange rate regimes and contemporarily by the justification for the EMU. It represents the first effort to deal with a model of many currencies for one country since R. Mundell introduced the idea that the domain of optimum currency areas should be defined by structural characteristics rather than national boundary in 1961.
Author: Thanawat Trivisvavet
Publisher:
ISBN:
Category : Monetary unions
Languages : en
Pages : 36
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