Capital Account Policies and the Real Exchange Rate
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.
This paper was prepared for the National Bureau of Economic Research (NBER) International Seminar on Macroeconomics (ISoM), Oslo, June 15-16, 2012. The first version of this paper was circulated in February 2011. I thank the conference participants, and especially my discussants Javier Bianchi and Lars Svensson for their comments on the conference draft, as well as Nicholas Borst and Patrick Douglass for their help in collecting the data. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.
Olivier Jeanne, 2013. "Capital Account Policies and the Real Exchange Rate," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 9(1), pages 7 - 42.
Capital Account Policies and the Real Exchange Rate, Olivier Jeanne. in NBER International Seminar on Macroeconomics 2012, Giavazzi and West. 2013