A Darwinian perspective on "exchange rate undervaluation"

Qingyuan Du, Shang-Jin Wei

Research output: Contribution to journalArticleResearchpeer-review

2 Citations (Scopus)

Abstract

This paper studies how status competition for marriage partners can generate surprising effects on the real exchange rate (RER). In theory, a rise in the sex ratio (increasing relative surplus of men) can generate a decline in the RER. The effect can be quantitatively large if the biological desire for a marriage partner is strong. We also provide within-China and cross-country empirical evidence to support the theory. As an application, our cross-country estimation suggests that sex ratio as well as other factors in the existing literature can account for the recent evolution in Chinese RER almost completely.
Original languageEnglish
Pages (from-to)111-138
Number of pages28
JournalEuropean Economic Review
Volume83
DOIs
Publication statusPublished - 1 Apr 2016

Keywords

  • Currency manipulation
  • Equilibrium real exchange rate
  • Surplus men

Cite this