Kan Yue, a second-year student in the Graduate Program, was honored by the Illinois Economics Association (IEA) for her empirical research in International Finance. Her paper on the interaction between exchange rates and current accounts was selected for first place in the MA/MS thesis competition by the IEA in October 2010. She presented this paper in the 40th IEA annual conference.
The study is motivated by the perception that China’s current account surplus is a cause of the ongoing global imbalance (including the US trade deficit) and China’s exchange rate system has accounted for the imbalance. Kan Yue conducted causality tests with times-series data (1982-2008) and found that China’s current account surplus does not result from their “undervalued” currency. This implies that the global imbalance and US trade deficit are caused by other factors, rather than the Chinese currency.This work was done under guidance of Professor Hassan Mohammadi and Professor Kevin H. Zhang, in conjunction with the ECO 439 (Micro-Econometrics) and ECO 346 (International Finance) courses. Kan would like to express her appreciation to Professor Mohammadi, Professor Zhang, Professor Bilger and the Department of Economics for support and encouragement. She plans to pursue Ph.D. studies in economics.