A Nw Paradigm for Asian Development Chinese Growth 亚洲发展中国经济增长的新范式.pptVIP

Exchange Rates Asian Development What’s Up with the Exchange Rate?? Andrew K. Rose UC Berkeley, NBER and CEPR The Basic Long-Run Issue America’s Current Account Deficit 2006: $811.5 billion deficit (!) 6.2% of American GDP Implies annual Capital Inflows of $2700 per person annually (!) 2007Q1: deficit of $192.6 billion Almost all Goods (Services in surplus but small) Small persistent income surplus Causes Some Dispute among Economists Still, Low American Savings chief reason Personal Savings very low lately, often negative Public Sector also dis-saving (Federal deficits) Lack of Investment outside US also possible issue Current Account: Sustainable? Size of Deficit unprecedented for America Also unprecedented for “Anchor” country US now taking over 75% of all global savings flows Capital running “uphill” from poor to rich (!) Growing US external debt Adjustment must involve Prices For current account to close, savings must rise (or investment fall, or both) Symmetrically, exports must rise dramatically, while import growth slows Exchange Rate one of the key adjustment mechanisms So long-run depreciation of Dollar is likely How Much? Many Different Estimates, Little Consensus Most expect at least another 15-25%, sometimes more Exchange Rates often overshoot Timing: almost impossible Where will Effects be Felt? Three Big Currency Zones in World: Dollar, Asian-zone, Europeans But exchange rate policy varies across world Dollar floats freely against Many Currencies Europeans (including UK, Norway) Also Canada, NZ, Australia, etc But Asia is Different Asians take Exchange Rate Policy Seriously Almost all East Asians manage currencies, will continue to do so Part a Legacy of Asian Crisis of ’97-’98 Part a Development Strategy … Which Leads us to China How to Think about the Yuan? Chinese Communist Party Needs Growth to Survive Politically Growth is Required to Absorb Massive Unemployment in Chinese Countryside Agricultural Peasants Must Be Transformed Into Manufac