[Working Paper No 2005 - 01]

----TABLE OF CONTENTS----
REAL EQUILIBRIUM EXCHANGE RATE IN CHINA
SUMMARY....................................................4
ABSTRACT ..................................................4
RÉSUMÉ.......................................................5
RÉSUMÉ COURT..................................5
1. INTRODUCTION...................6
2. IS THE RENMINBI MISALIGNED ?.................................8
2.1 The usual « suspects » .......................8
2.2 The Balassa effect...............................10
2.3 Cross-section estimations ...................12
2.4 Panel data estimations ...........................15
2.5 Why is there no Balassa effect at work in China ? ..................19
3. FURTHER INVESTIGATIONS WITH FEERs ............................20
3.1 The theoretical framework...........................20
3.2 The resolution method...........................21
3.3 Defining the internal equilibrium and structural current accounts ..........24
3.4 Two approaches for defining the external equilibrium.....................25
3.5 Calculated misalignments......................................28
3.6 What would be the implications of a renminbi's revaluation? .................30
3.7 Uncertainties .....................................31
3.8 Comparisons with previous results..........................31
4. CONCLUSION .......................33
REFERENCES .......................34
APPENDIX 1...........................38
APPENDIX 2...........................41
LIST OF THE WORKING PAPERS FROM CEPII...........45