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Journal
2017 | 1 | 166-179
Article title

Relationships between exchange rates, economic growth and FDI in China: An empirical study based on the TVP-VAR model

Content
Title variants
Languages of publication
EN
Abstracts
EN
This paper investigates the relationships between exchange rates, economic growth and foreign direct investment through a time-variant parameter VAR model using monthly data from China for the period 2001-2016. The focus is on the reaction of economic growth to a shock change in exchange rates or foreign direct investment. The dynamic impulse response function showed that the relationships do not instigate great change. A positive shock in the real exchange rate slows down FDI inflows, with no evidence to support the contractionary devaluation theory in China, which suggests that an increase in the real RMB exchange rate generally causes a negative influence on China’s economic growth. The empirical results of this research contradict what intuition suggests and indicates that FDI has generated an ambiguous effect on economic growth in the past few years. Before 2008, shock changes in FDI would cause economic growth to lag for one period. Since then, the lag phenomenon has disappeared due to better regulation and a maturing financial market.
Journal
Year
Volume
1
Pages
166-179
Physical description
Dates
published
2017-06-27
Contributors
author
  • North China University of Technology
author
  • North China University of Technology
References
Document Type
Publication order reference
Identifiers
YADDA identifier
bwmeta1.element.desklight-75c4b508-2ddb-41f0-bd24-0724ae0982a8
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