On Current Account Sustainability of China's Balance of International Payments
On the basis of intertemporal models of Hakkio and Rush(1991) and Husted(1992),this paper studies China's current account sustainability from 1990 to 2010.Using the real import and export values,it finds that there is no cointegration relationship between imports and exports in China,which shows that current account does not meet the intertemporal budget constraint.In addition,using the structure break test of Gregory and Hansen(1996),it also finds that the time series of imports and exports in China are featured by cointegration relationship since the second quarter in 2005,showing the sustainability of imports and exports in China.This is due to the RMB exchange rate reform in 2005.