The equilibrium real exchange rate of China: a productivity approach

A large body of theoretical and empirical works asserts that exchange rates depend upon a country's productivity growth, and this effect is dubbed the Balassa-Samuelson effect. This paper examines the evidence for a Balassa-Samuelson based explanation for the real exchange rate movements of China vis-a-vis the U.S. dollar. Using disaggregated industry level data, we construct sectoral total factor productivities (TFPs) for the tradable and nontradable sectors from 1980-2003. Our main findings are: (a) the sectoral TFP differential is cointegrated with the relative price of nontradables with the unit cointegration vector; and (b) the real exchange rate is cointegrated with home and foreign sectoral TFP differentials. This productivity based real exchange rate model is then used to estimate the equilibrium exchange rates of the Renminbi (RMB). A comparison of the equilibrium exchange rate predicted by the productivity-based model and the actual rate indicates that the Renminbi is somewhat undervalued against the US dollar, though the undervaluation is not statistically significant. Our conclusions continue to hold even after we have controlled for the movements of net foreign assets.Nontraded Goods; Balassa-Samuelson Model; Cointegration

The equilibrium real exchange rate of China: a productivity approach

A large body of theoretical and empirical works asserts that exchange rates depend upon a country's productivity growth, and this effect is dubbed the Balassa-Samuelson effect. This paper examines the evidence for a Balassa-Samuelson based explanation for the real exchange rate movements of China vis-a-vis the U.S. dollar. Using disaggregated industry level data, we construct sectoral total factor productivities (TFPs) for the tradable and nontradable sectors from 1980-2003. Our main findings are: (a) the sectoral TFP differential is cointegrated with the relative price of nontradables with the unit cointegration vector; and (b) the real exchange rate is cointegrated with home and foreign sectoral TFP differentials. This productivity based real exchange rate model is then used to estimate the equilibrium exchange rates of the Renminbi (RMB). A comparison of the equilibrium exchange rate predicted by the productivity-based model and the actual rate indicates that the Renminbi is somewhat undervalued against the US dollar, though the undervaluation is not statistically significant. Our conclusions continue to hold even after we have controlled for the movements of net foreign assets

The equilibrium real exchange rate of China: a productivity approach

A large body of theoretical and empirical works asserts that exchange rates depend upon a country's productivity growth, and this effect is dubbed the Balassa-Samuelson effect. This paper examines the evidence for a Balassa-Samuelson based explanation for the real exchange rate movements of China vis-a-vis the U.S. dollar. Using disaggregated industry level data, we construct sectoral total factor productivities (TFPs) for the tradable and nontradable sectors from 1980-2003. Our main findings are: (a) the sectoral TFP differential is cointegrated with the relative price of nontradables with the unit cointegration vector; and (b) the real exchange rate is cointegrated with home and foreign sectoral TFP differentials. This productivity based real exchange rate model is then used to estimate the equilibrium exchange rates of the Renminbi (RMB). A comparison of the equilibrium exchange rate predicted by the productivity-based model and the actual rate indicates that the Renminbi is somewhat undervalued against the US dollar, though the undervaluation is not statistically significant. Our conclusions continue to hold even after we have controlled for the movements of net foreign assets

Real Exchange Rates and Productivity: Evidence From Asia

This paper examines a productivity-based explanation of the long run real exchange rate movements of six Asian economies. Using industry level data, we construct total factor productivities (TFPs) for the tradable and nontradable sectors. We find that (a) within each country the relative price of nontradable goods is cointegrated with the sectoral TFP differential, and (b) the real exchange rates are cointegrated with the home and foreign sectoral TFP differentials. Using the predicted real exchange rate as a measure of the "long-run equilibrium", we find that most Asian economies�real exchange rates are overvalued before the Asian Financial Crisis

Real Exchange Rates and Productivity: Evidence From Asia

This paper examines a productivity-based explanation of the long run real exchange rate movements of six Asian economies. Using industry level data, we construct total factor productivities (TFPs) for the tradable and nontradable sectors. We find that (a) within each country the relative price of nontradable goods is cointegrated with the sectoral TFP differential, and (b) the real exchange rates are cointegrated with the home and foreign sectoral TFP differentials. Using the predicted real exchange rate as a measure of the "long-run equilibrium", we find that most Asian economies�real exchange rates are overvalued before the Asian Financial Crisis

Risk profiles and one-year outcomes of patients with newly diagnosed atrial fibrillation in India: Insights from the GARFIELD-AF Registry.

BACKGROUND: The Global Anticoagulant Registry in the FIELD-Atrial Fibrillation (GARFIELD-AF) is an ongoing prospective noninterventional registry, which is providing important information on the baseline characteristics, treatment patterns, and 1-year outcomes in patients with newly diagnosed non-valvular atrial fibrillation (NVAF). This report describes data from Indian patients recruited in this registry. METHODS AND RESULTS: A total of 52,014 patients with newly diagnosed AF were enrolled globally; of these, 1388 patients were recruited from 26 sites within India (2012-2016). In India, the mean age was 65.8 years at diagnosis of NVAF. Hypertension was the most prevalent risk factor for AF, present in 68.5% of patients from India and in 76.3% of patients globally (P < 0.001). Diabetes and coronary artery disease (CAD) were prevalent in 36.2% and 28.1% of patients as compared with global prevalence of 22.2% and 21.6%, respectively (P < 0.001 for both). Antiplatelet therapy was the most common antithrombotic treatment in India. With increasing stroke risk, however, patients were more likely to receive oral anticoagulant therapy [mainly vitamin K antagonist (VKA)], but average international normalized ratio (INR) was lower among Indian patients [median INR value 1.6 (interquartile range {IQR}: 1.3-2.3) versus 2.3 (IQR 1.8-2.8) (P < 0.001)]. Compared with other countries, patients from India had markedly higher rates of all-cause mortality [7.68 per 100 person-years (95% confidence interval 6.32-9.35) vs 4.34 (4.16-4.53), P < 0.0001], while rates of stroke/systemic embolism and major bleeding were lower after 1 year of follow-up. CONCLUSION: Compared to previously published registries from India, the GARFIELD-AF registry describes clinical profiles and outcomes in Indian patients with AF of a different etiology. The registry data show that compared to the rest of the world, Indian AF patients are younger in age and have more diabetes and CAD. Patients with a higher stroke risk are more likely to receive anticoagulation therapy with VKA but are underdosed compared with the global average in the GARFIELD-AF. CLINICAL TRIAL REGISTRATION-URL: http://www.clinicaltrials.gov. Unique identifier: NCT01090362

On the Evolution of Comparative Advantage in Matching Models

This paper examines whether comparative advantage is the long-run outcome of an evolutionary process in the open economy. It formalizes the notion that natural selection eliminates inefficient firms and thus leads to stable and perhaps efficient patterns of world trade. Instead of assuming the existence of a Walrasian auctioneer, we study two simple matching processes that coordinate trade between firms. Our central result is that specialization according to comparative advantage, with the larger country possibly incompletely specialized, is the unique evolutionarily stable state of the world economy

The Relative Price of Nontraded Goods and Sectoral Total Factor Productivity: An Empirical Investigation

This paper examines the relationship between the relative price of nontraded goods and sectoral total factor productivities (TFPs) in the context of the Balassa-Samuelson model. With perfect capital mobility internationally and perfect factor mobility domestically, the relative price of nontraded goods is predicted to be independent of preferences over traded and nontraded goods, and completely determined by TFPs in the traded- and nontraded-goods sectors. Panel cointegration and unit root tests, applied to a panel of fourteen OECD economies, indicate that the relative price of nontraded goods and the labor-share-adjusted TFP differential are cointegrated with the unit cointegration vector. © 2003 President and Fellows of Harvard College and the Massachusetts Institute of Technology.