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[STBI-16-03-2017] Costs and Benefits of Sterilized Foreign Exchange Intervention (i.e. Exchange Rate Protection) in China in the 2000s

Prof. James Riedel

Johns Hopkins University


11:00 am, Thursday, 16-03-2017

Hall H.001, UEH School of Economics

1A Hoang Dieu Street. Phu Nhuan District. HCM city


From 2002 to 2010, China ran large surpluses in both the current and capital accounts of its balance of payments, which the People’s Bank of China (PBOC) purchased and held at official foreign reserves to avoid nominal appreciation of the currency. Concurrently, with its massive purchases of foreign exchange, the PBOC compelled commercial banks to buy PBOC “sterilization bonds” and raised commercial bank reserve requirement ratios to avoid monetization of its foreign exchange purchases and concomitant upward pressure on the price level (i.e. real appreciation of the currency). Sterilizing foreign exchange intervention, as China did for a decade, constitutes a violation of the implicit rules of a fixed exchange rate regime and as such can be seen as a mercantilist policy of manipulating the real exchange rate to gain, or avoid losing, international price competitiveness, what Corden (1981) termed as “exchange rate protection.” This paper sets out the simple theory of the costs and benefits of exchange rate protection and provides back-of-theenvelope estimates of their magnitude in China in the 2000s. It also explores the “other side of the story,” the decline in U.S. manufacturing employment in the 2000s, which recent literature attributes to a “China Trade Shock” that allegedly resulted from the U.S. granting Permanent Normal Trade Relations (PNTR) to China in 2001. Here it is argued that the so-called “China Trade Shock” resulted from China’s sterilized intervention policy, not the granting of PNTR. The implications of these competing hypotheses are consider in the conclusion of the paper

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2017 03 16 STBI James Riedel 450 1



Điều kiện dự thi:

  • Thí sinh có bằng tốt nghiệp đại học thuộc khối ngành kinh tế hoặc bằng tốt nghiệp đại học ngoài khối ngành kinh tế kèm chứng chỉ bổ sung kiến thức.
  • Thí sinh dự thi 2 môn bằng tiếng Anh (Toán, Kinh tế học).


Yêu cầu tiếng Anh đầu vào:

  • Tương đương khung B2 Châu Âu (CEFR B2, TOEIC 600, IELTS 5.5, TOEFL 500 BPT, 173 CBT, 61 iBT)


Lớp ôn tập:

  • Lớp ôn cấp tốc (đợt cuối): Tối thứ 5 - Trưa thứ 7 - Khai giảng 20/07/2017


Lịch thi tuyển sinh: 10/09/2017


Lịch khai giảng dự kiến khóa 24: 28/10/2017


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