| In this dissertation, we study the trade mis-invoicing, a major channel for capital flight via trade. We examine the international pattern of the trade mis-invoicing and analyze its association with the economic globalization. Further in the second chapter, we use China's trade mis-invoicing with its 130 trade partners as a proxy for the hot money and empirically test the association between the hot money flows and the Renminbi appreciation expectation. Since hot money flows expose the economy to the risk of high inflation and sudden stop, a good understanding of the trade mis-invoicing helps in the monetary policy making. In the last chapter, we study the monetary policies by focusing on the inflation targeting operation. We analyze the behavioral change in central banks' response to the exchange rates at the time of inflation targeting adoption. |
