Agnès Bénassy-Quéré, Benjamin Carton & Ludovic Gauvin , 2011.
"Rebalancing Growth in China: An International Perspective,"
CEPII Working Paper 2011- 08 , April 2011 , CEPII.
Based on simulations of an original DGE model of the US, Chinese and Euro area economies with financial frictions and various monetary regimes, the paper shows that the contribution of China in global rebalancing should primarily rely on structural policies aiming at reducing aggregate savings in China. The role of the exchange-rate regime would be minor under standard monetary policies, although more important if monetary policies in advanced countries are constrained, as they are today. Finally, relying only on a change in China’s monetary regime (without structural reforms) could end up in delaying rather than accelerating the rebalancing, depending on China’s policy regarding accumulated reserves.
Global imbalances ; EXCHANGE RATE ; capital controls ; CHINA