The Political Economy of 'Currency Manipulation' Bashing

29 Pages Posted: 6 Nov 2011

See all articles by Carlos D. Ramirez

Carlos D. Ramirez

George Mason University - Department of Economics

Date Written: September 25, 2011

Abstract

One of the most frequently debated issues in Congress over the past few years has been the value of the Chinese renminbi (RMB) relative to the dollar. It is no secret that congressmen in the U.S. frequently accuse China of being a “currency manipulator.” This paper has two objectives. First, it investigates the extent to which PAC contributions from key interest groups influences the frequency with which congressmen criticize China’s exchange rate policy, controlling for other factors. The results indicate that the odds that a congressman will call China a “currency manipulator” are 1.35 times higher for every additional $5,000 in PAC contributions from groups that favor legislation against China. The odds go up to 1.8 for an additional $10,000 in PAC contributions. Second, it investigates the consequences that “currency manipulation” bashing may have on the rate at which the RMB appreciates against the U.S. dollar. The results for a VAR model indicate that an increase in the incidence of “currency manipulation” bashing appears to slow down, rather than accelerate, the rate at which the Renmibi appreciates against the dollar. This last result suggests that bashing China may actually be counterproductive.

Keywords: Currency manipulation, China bashing, PAC Contributions

JEL Classification: F59, D72

Suggested Citation

Ramirez, Carlos D., The Political Economy of 'Currency Manipulation' Bashing (September 25, 2011). GMU Working Paper in Economics No. 11-50, Available at SSRN: https://ssrn.com/abstract=1955237 or http://dx.doi.org/10.2139/ssrn.1955237

Carlos D. Ramirez (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
Enterprise Hall MSN 3G4
Fairfax, VA 22030
United States
703-993-1130 (Phone)
703-993-1133 (Fax)

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
159
Abstract Views
1,001
Rank
334,740
PlumX Metrics