China and other emerging market economies hoM large amounts of US dollar （USD）-denominated assets while their enterprises mainly raise funds from domestic banks. These economies＇currencies are under a constant pres...China and other emerging market economies hoM large amounts of US dollar （USD）-denominated assets while their enterprises mainly raise funds from domestic banks. These economies＇currencies are under a constant pressure to appreciate. The authors of this paper apply the model used in Bernanke et al. （1999） to small open economies in order to find out the optimal exchange rate regime for the emerging market economies. Findings indicate that a country＇s choice of exchange rate regime is directly associated with its percentage of USD-denominated assets and the strength of the financial accelerator effect. A managedfloating rate regime is more desirable than afreefloating regime because of its ability to better avoid liquidity traps given appreciation pressure. A managed floating rate regime also outperforms a fixed exchange rate regime because the former tends to cause less welfare loss. These factors make a managed floating rate regime the optimal choice for emerging market economies. Lastly, the authors propose policy steps and suggestions based specifically on China＇s current situation.展开更多
The purpose of this paper is to test the applicability of the ＂financial ac- celerator＂ mechanism to China. Using the Chinese Industrial Enterprises Database, we find strong evidence suggesting that the employment a...The purpose of this paper is to test the applicability of the ＂financial ac- celerator＂ mechanism to China. Using the Chinese Industrial Enterprises Database, we find strong evidence suggesting that the employment and investment of leveraged firms are less responsive to aggregate fluctuations. This finding goes against the im- plications of the ＂financial accelerator＂. To make sure our empirical result is reliable, we have done several robustness checks using different estimation methods and sub- samples.展开更多
文摘China and other emerging market economies hoM large amounts of US dollar （USD）-denominated assets while their enterprises mainly raise funds from domestic banks. These economies＇currencies are under a constant pressure to appreciate. The authors of this paper apply the model used in Bernanke et al. （1999） to small open economies in order to find out the optimal exchange rate regime for the emerging market economies. Findings indicate that a country＇s choice of exchange rate regime is directly associated with its percentage of USD-denominated assets and the strength of the financial accelerator effect. A managedfloating rate regime is more desirable than afreefloating regime because of its ability to better avoid liquidity traps given appreciation pressure. A managed floating rate regime also outperforms a fixed exchange rate regime because the former tends to cause less welfare loss. These factors make a managed floating rate regime the optimal choice for emerging market economies. Lastly, the authors propose policy steps and suggestions based specifically on China＇s current situation.
文摘The purpose of this paper is to test the applicability of the ＂financial ac- celerator＂ mechanism to China. Using the Chinese Industrial Enterprises Database, we find strong evidence suggesting that the employment and investment of leveraged firms are less responsive to aggregate fluctuations. This finding goes against the im- plications of the ＂financial accelerator＂. To make sure our empirical result is reliable, we have done several robustness checks using different estimation methods and sub- samples.
