The Research On The Adequacy Of The International Reserve Of China

Alongside the steady economic growth of China and the weakening economy of the western countries after the financial crisis, the increasing size of the international reserve with a large part denominated in US dollar is facing the devaluation. Solving the management problem of the abnormal size international reserve is important and urgent. The size and the structure are two important problems in running the international reserve of China.In the dissertation, the existed and the previous research about the adequacy of the international reserve is reviewed and classified according to the chronological order. The buffer stock models based on the inventory control system are systematically examined. The second chapter is about the literature review of the adequacy of the international reserve; the third chapter deals with the factors affecting the international reserve demand; the fourth chapter devoted to the study of the model of the adequacy of the international reserve based on ROP; the fifth chapter discusses the management of the international reserve structure, and the suggestions are followed accordingly. Based on the previous research, the theory of the international reserve affected by international environment is put forward; the denominating factors for international reserve are analyzed quantitatively and qualitatively. The HP filter is used in analyzing the relationships between the factors affecting international reserve and the international reserve. The relationship between the exchange rate and the international reserve is analyzed; the relations between the excessive liquidity and the increasing international reserve are also discussed. The dissertation systematically studied the buffer stock models which are based on the inventory control; based on the previous models the author put forward a model based on the ROP(Re-Order Point) to control the adequacy of the international reserve. The dissertation also does the positive study according to the method given in the new model, and in the end of the positive study, the range of adequacy of the Chinese international reserve is provided. In the last chapter of the dissertation, the current situation of the Chinese international reserve and the comparison of the international reserve between China and the other countries are shown. The author points out the current problems in the management of international reserve and gives the solutions and suggestions based on the research.The research is based on the thought of systematic science and strategic management. The normative and positive study methods are used in the dissertation. The author does the literature review in the adequacy study of the international reserve study in the second chapter based on the second hand data; in the fourth chapter, the author put forward the model of the adequacy of international reserve based on the ROP of Inventory control using the mathematical and probability thoeries; the structural break, unit root and co-integration test, HP filters, and Monte Carlo simulation technique are also used in the dissertation; based on the different "service level" of international reserve, the author suggests the range of the adequacy of the international reserve of China.From the research, the author provides the model of adequacy for interational reserve. We can see the increasing speed of accumulation of the international reserve in China clearly after the year of 2005. The actual international reserve has surpassed the range of adequacy calculated based on the difference of the statement of international payments following the author's IRAD model. In the last chapter, the author expresses the personal suggestions to the interanational reserve structure. For the extra international reserve the author gives the suggestions accordingly.