Do Hong Kong SAR and China Constitute An Optimal Currency Area? An Empirical Test of the Generalized Purchasing Power Parity Hypothesis [electronic resource] / Hong Liang.
Material type:
TextSeries: IMF Working Papers; Working Paper ; No. 99/79Publication details: Washington, D.C. : International Monetary Fund, 1999Description: 1 online resource (17 p.)ISBN: 1451850182 :ISSN: 1018-5941Subject(s): Cointegration | Exchange Rate | Exchange Rates | Generalized Purchasing Power Hypothesis | Optimal Currency Union | Real Exchange Rate | Hong Kong Special Administrative Region of ChinaAdditional physical formats: Print Version:: Do Hong Kong SAR and China Constitute An Optimal Currency Area? An Empirical Test of the Generalized Purchasing Power Parity HypothesisOnline resources: IMF e-Library | IMF Book Store Abstract: 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.
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.
Description based on print version record.
There are no comments on this title.