NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Capital Account Policies and the Real Exchange Rate

Olivier Jeanne

NBER Working Paper No. 18404
Issued in September 2012
NBER Program(s):   IFM

This paper presents a simple model of how a small open economy can undervalue its real exchange rate using its capital account policies. The paper presents several properties of such policies, and proposes a rule of thumb to assess their welfare cost. The model is applied to an analysis of Chinese capital account policies.

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Document Object Identifier (DOI): 10.3386/w18404

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