Be Cautious for Chinese Capital Account liberalization----Perspective from DSGE Policy Simulation
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| Title | Be Cautious for Chinese Capital Account liberalization----Perspective from DSGE Policy Simulation
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| Author | Liu hongzhong, Yang xiaohai and Wang dihai |
| Organization | School of Economics, Fudan University of China |
| Email | hzliu@fudan.edu.cn；yxhfd528@163.com；Wangdihai@fudan.edu.cn |
| Key Words | Policy Simulation; Capital Outflows; Foreign Reserves |
| Abstract | For a long time, Studies on the simulation of Chinese Capital Account liberalization not only encounter the criticism of lack of micro-foundation, but also face with controversial empirical result. In the framework of bilateral DSGE model, a method of academia latest method has been improved. At the same time, according to the economic fundamentals, we simulate the gradual process of Chinese opening foreign equity investment, and also assess its potential risks. The simulation results show that if the foreign equity investment was fully opened, China may face the pressure of capital outflows, and foreign exchange reserves will face the risk of depletion. This paper advocates economic structural reform should be ahead of capital account liberalization, and speeding up the reform of domestic financial systems would ease the pressure of capital outflows after future capital account liberalization. |
| Serial Number | WP925 |
| Time | 2015-09-30 |
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