TY - JOUR
T1 - A Darwinian perspective on exchange rate undervaluation
AU - Du, Qingyuan
AU - Wei, Shang-Jin
PY - 2016
Y1 - 2016
N2 - 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.
AB - 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.
U2 - 10.1016/j.euroecorev.2015.12.010
DO - 10.1016/j.euroecorev.2015.12.010
M3 - Article
VL - 83
SP - 111
EP - 138
JO - European Economic Review
JF - European Economic Review
ER -