Quantifying the impacts of China’s currency depreciation and capital control: a CGE analysis

ABSTRACT

A dynamic global multi-regional computable general equilibrium (CGE) model is built to study the effects of Renminbi (RMB) depreciation and capital account liberalization. The simulation results suggest that although the depreciation of RMB can promote China’s trade surplus, it will nevertheless discourage domestic investment, consumption and lead to a decrease of real GDP.

KEYWORDS:

• Global dynamic CGE model
• capital control
• currency devaluation

JEL CLASSIFICATION:

• C68
• E10
• F41

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ INV, EXP and IMP indicate investment, import and export, respectively.