{"id":503107,"date":"2010-04-01T16:00:00","date_gmt":"2010-04-01T20:00:00","guid":{"rendered":"e2249889-c78b-43e3-9643-b1d7d4aa587b:417686"},"modified":"2010-04-01T16:00:00","modified_gmt":"2010-04-01T20:00:00","slug":"yuan-appreciation-could-have-little-impact-on-u-s-output","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/503107","title":{"rendered":"Yuan appreciation could have little impact on U.S. output"},"content":{"rendered":"<p>The hard-liners yelling for stern U.S. action against low-cost Chinese imports are accustomed to blaming the cheap yuan for stubbornly high unemployment, especially in the United States. But not so fast, <a href=\"http:\/\/cowles.econ.yale.edu\/P\/cd\/d17b\/d1755.pdf\" >says Ray C. Fair<\/a>, a professor at Yale University. He has constructed a fiendishly complicated \u201cmulticountry macroeconomic model\u201d to assess what would happen if China let its currency gain in value.<\/p>\n<p>The effects are more complicated than people think, according to Fair. Sure, a more expensive yuan would make Chinese goods more expensive on world markets and reduce the appeal of those goods to U.S. consumers. But the stronger yuan would also slow the Chinese economy and reduce Chinese demand for U.S. products. It would lead to an increase in U.S. domestic prices and eventually an increase in U.S. short-term interest rates.<\/p>\n<p>How does all this net out? \u201cIt will be seen,\u201d says Fair, \u201cthat the net effect of the yuan appreciation on U.S. output and unemployment is close to zero\u2014in fact slightly negative.\u201d <\/p>\n<p>Fair goes on to note: \u201cThe main message from analyzing the model\u2019s results regarding the effects on U.S. output from a yuan appreciation is that one cannot look only at the positive output effect from the fall in U.S. imports from China. U.S. exports to China fall, which is contractionary, and inflation increases, which is also contractionary.\u201d<\/p>\n<p>Let\u2019s hope this message reaches the U.S. Congress before someone starts a trade war.<\/p>\n<p><span style=\"font-style:italic;\">Freelance business journalist <span style=\"font-weight:bold;\">Ian McGugan<\/span> blogs for the Financial Post<\/span> <\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/network.nationalpost.com\/NP\/aggbug.aspx?PostID=417686\" width=\"1\" height=\"1\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The hard-liners yelling for stern U.S. action against low-cost Chinese imports are accustomed to blaming the cheap yuan for stubbornly high unemployment, especially in the United States. But not so fast, says Ray C. Fair, a professor at Yale University. He has constructed a fiendishly complicated \u201cmulticountry macroeconomic model\u201d to assess what would happen if [&hellip;]<\/p>\n","protected":false},"author":4059,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-503107","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/503107","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/4059"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=503107"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/503107\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=503107"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=503107"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=503107"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}