| For a country’s economy, economic growth and economic stability is the most important objective. In order to achieve this goal, countries spare no effort by investment, consumption and net export to solve the economic problems faced. Under the open economy condition, however, the economic relationship between countries becomes tighter, and the international economic cooperation and trade impinge on the domestic economy followed. Due to the complexity of the economic system, the exchange rate regime and exchange rate system is diverse. In this context, it is becoming increasingly important to study the impact of exchange rate volatility on the economy aggregate demand. Therefore, our research start at a managed floating exchange rate system research in2005, discussed the impact of exchange rate fluctuations on the real economy from the three different perspectives--c consumption, investment, net exports and the output, respectively. We discussed, systematically, the real effect of exchange rate and its fluctuations, and ultimately, we provide reference comments and suggestions for the macroeconomic policy-making.This paper is divided into three parts. The first part is the literature review and summary on the relationship between exchange rate, exchange rate regime, exchange rate and macro economy, the second part is the construction of the exchange rate and exchange rate index and China exchange rate regime evolution; the third part is the empirical test of exchange rate and consumption, investment, net exports, and output.First of all, the article systematically teased and summarized the related theories about the exchange rate and the exchange rate regime and its impact on the macro economy, introduce the method to measure exchange rate fluctuations, eventually elicits the research framework regarding that the exchange rate volatility impinges on macro economy.Further, we conducted a review of the literature on the economic impact of the exchange rate and its fluctuations, introduced the extant research results respectively from four perspectives-consumption, investment, net export, and output-how they are affected by the exchange rate of four angle output, and emphasized to analyze the arguments and deficiency of the extant literatures, to provide literature support for our paper.In the part of empirical research, we firstly established statistical methods of RMB exchange rate index, then systematically teased the process, direction and the existing problem regarding that China reformed its exchange rate regime. On the basis of these, we referred to domestic and foreign compilation methods that fully reflect characters of the exchange rate taking Chinese economic characteristics and the market economy system into consideration, using the divisor amendment method, the effect of the third party market considered, built Chinese exchange rate index. Besides, we compared our indexes with which prepared by BIS, for future empirical research based. The real exchange rate and nominal exchange rate index of RMB calculated in this paper have more obvious volatility characteristics, what’s more, our construction of exchange rate index more fully considered the influence of price fluctuation and the GDP deflator. Considering the effect of the index factor is more fully exchange rate index, the RMB exchange rate index reflects the relative change on trade situation and economic strength in various countries and regions.The empirical analysis of effectiveness to consumption by the exchange rate and its fluctuations, we use GARCH model to measure the exchange rate volatility to construct the empirical model which analyzes the impact from the aspects of consumption structure and total consumption. As result, the current RMB appreciation would lead to domestic consumption level rises, and the impact on consumption will last20months; change of RMB exchange rate will have a long-termly stable influence on the domestic consumption level, and appreciation of RMB will rise the domestic consumption level; exchange rate volatility increase will lead to a decline in domestic consumption level, the impact duration is15months; in addition, increase of total output, reduction of the price level, improvement of terms of trade, and the increase of trade openness will stably improve domestic consumption level in the long term.Therefore, we think, from the exchange rate volatility level, stimulating domestic demand can be realized through the stable appreciation of RMB and reducing the fluctuation of RMB’s exchange rate; from the other perspective, increasing output level, reducing the level of consumer prices, improving trade conditions, increasing trade openness, will promote the rise in domestic consumption the level.In the empirical analysis on the impact of exchange rate volatility on investment, we study the impact of RMB exchange rate fluctuations on the domestic level of investment and the related transmission mechanism. We test and estimate of gross domestic investment and other indicators by using GARCH model to measure the features of exchange rate volatility. As the consequence of the study, the continued appreciation of the RMB would not conducive to investment level of domestic enterprises, and this means that the domestic enterprises’ investment will need the devaluation of the RMB, rather than the appreciation; the continued appreciation of the RMB is not conducive to attracting foreign direct investment which prefer RMB currency value stability to the continued appreciation; the RMB exchange rate fluctuation impede the domestic investment. In the long run, only stability of RMB can stabilize the investment.In the empirical research on the influence of import and export of exchange rate and its fluctuations, we construct a model from import and export two angles to analyze the impact, using the panel data of Chinese trade partners in which38countries and regions of are included. The empirical results show that Chinese exports are mainly affected by the foreign output, trade openness and trade conditions, the devaluation of the RMB by reducing the increase of import then increasing trade surplus and that fluctuation of exchange rate mainly affects the export and effect on import is not significant; to maintain the stability of the import and export trade, first of all, to ensure the stability of RMB.In the study of exchange rate and its fluctuations on the impact of economic growth, we construct related model which reflect the impact of exchange rate and its fluctuations on the output divided the economic growth into two types--technological progress economic growth and Investment oriented economic growth. The empirical results show that, the fluctuation of RMB exchange rate had a significant effect on Investment oriented economic growth, however, it is not significant to another type, which means that China’s economic growth is still driven by import and export, investment, government spending. The devaluation of the RMB contributes to increase our level of output, but from the perspective of technological progress, exchange rate and its fluctuation in China did not promote the total factor productivity. Likewise, increase of foreign investment and trade openness don’t work.In general, our systematically research can produce certain effect on the exchange rate and economic policies. In the short term, a pressing matter of the moment in our country at present is in the maintenance of the stability of the RMB, at the same time, to achieve industrial upgrading and trade structure upgrading as soon as possible, get rid of the dilemma that our economy remains too reliant on investment, government expenditure and net export; in the long term, the RMB exchange rate fluctuation enhanced adversely affect the real economy of our country, we should be in the premise of ensuring the stability of the RMB and achieve RMB stable, moderate appreciation.
|
PDF Full Text Request