Tuesday, December 18, 2007

Does the Fact that China is Poorer than we thought mean their Currency is Less Undervalued than we thought??


(hey we're economists. what did you expect, a straight answer?)

KPC earlier reported that the Asian Development Bank had done a full PPP price level and income study and found China's GDP to be about 40% lower than World Bank Figures.

In an excellent post over at Econobrowser, Menzie Chinn explains where this figure comes from and shows that using this new income data seriously weakens the case that the Chinese currency is undervalued relative to the dollar.

1 comment:

Anonymous said...

If China's currency isn't too cheap/plentiful, how come their inflation is so high?