Study On Economic Effects Of RMB Effective Exchange Rate Fluctuations

With the global financial crisis and world economic recovery after crisis era, world economic imbalances become obviously. China restarts RMB exchange rate reform, and push effective exchange rate to public view. In today's complex and severe economic and social background it is necessary to study economic effect of the RMB effective exchange rate fluctuations. In today's international monetary system, with China's economic and political status to rapidly increase, calls for RMB as the main international reserve currency is higher and higher, so in the long run, the Yuan appreciation will be foreseen. However, as the most based factor in open economy, Yuan appreciation will lead all aspects to the macro economy, it should be more cautious. The main purpose of this study is to examine RMB fluctuation produced by empirical analysis and observe the economic effects, to provide evidence for exchange rate policy. This article will first reviewed the existing research results of RMB effective exchange rate, reviewing the history evolution of exchange rate system reform and future development goals. Then emphatically follow the path of infection from the country's economic fluctuations caused by trade routes during the financial crisis to RMB exchange rate fluctuations, then the RMB exchange rate fluctuation on domestic economic entity and virtual economy and trade structure by the time development route and logical clues, to inspect the economic effects of RMB effective exchange rate. Finally we judge on China's external economic imbalances and internal economic imbalances adjustment effect of RMB fluctuation. The main purpose of this study is based on financial crisis generated RMB fluctuation before and after the economic effects of the empirical analysis, prudent objective for national exchange rate policy formulation gives evidence.In the integration of the world economy, the exchange rate effect is wide coverage and complex, this paper firstly does some research on achievements that already have from both theoretical and empirical research foundation, to build up further study structure. Based on this, to China's national conditions, summarizes the problems existing in the previous studies, try and defective supplement and complete them in this article.In financial crisis era, China firstly keep the growth stable and fast from the crisis, while also strongly provide help to other economic, to make a significant contribution for global recovery. Meanwhile, the RMB exchange rate reform is restarted, the central bank announced to further improve the RMB exchange rate flexibility, put forward the RMB effective exchange rate to replace bilateral exchange rate. Based on this, introduces the RMB effective exchange rate index constructing mode is important. This index can not only reflect the RMB and major trade partners bilateral exchange rate changes, also can reflect the weight of trading partners to trade fluctuant circumstance. To study Yuan appreciation pressure which will inevitably happens on RMB internationalization process and analysis cost-benefit, it is useful for whole understanding on RMB effective exchange rate index and RMB appreciation. With the integration of the world economy after the Asian financial crisis, global economy quickly recovery and develop, economic transactions between countries are close, so as global trade. This makes domestic economy of a country has to face to more impact of the economic changes, the international infect provides ways.Also, about the financial crisis, in the analysis of the change in exchange for further research of the domestic economy impact case is the primary and necessary. Therefore, we empirically study on domestic economic fluctuation by exchange rate infection. Based on Masson theory, through Canada, Germany, Japan, Britain and the United States, the fluctuation of the effective exchange rate proved trade links to this financial crisis. Peripheral countries infect China on the effective channels of trade and exchange rate fluctuation. Output deterioration and exchange rate devaluation caused RMB effective exchange rate fluctuation.The impact of the financial crisis, the domestic economic growth and global economic imbalances from developed countries give pressure to RMB, facing to upward and floating interval expanding situation. In this context, the domestic economic entity of the impact on the virtual economy and the investigation is very significant. The prices and employment as two entity economic key indexes can reflect people's living standard, stock price index is important virtual economic index. Through the data since Yuan reform, this study finds that the appreciation of RMB effective exchange rate in the economy running smoothly stages can cause of rising prices and increase employment levels, in financial crisis stage it will lead prices decline. So on a RMB revaluation should take careful attitude and related auxiliary measures to use.With the economy grow faster, China's long-standing external economic imbalances and domestic economic entity and virtual economic imbalances become persistent threat to the stable operation of China's macroeconomic potential barriers. To investigate the RMB exchange rate appreciation to ease the effective economic imbalance which has played a positive role or to worsen the situation, this paper respectively inspect effective exchange rate in macroeconomic indicators and the economic effects of representative. After adjusting the economic imbalances in the effectiveness and makes a detailed empirical testing, inspection results show that effective exchange rate appreciation not only can effectively relieve trade imbalances, still can optimize Chinese foreign trade structure and trade product structure and to promote national industrial structure adjustment has a positive effect; Meanwhile, effective exchange rate appreciation is very effective in the short term relief of virtual entity economy and economic imbalance of the situation, but use policy tool also need to pay attention to the policy effect the aging line and lagging, and auxiliary economic policy to ensure the smooth running of won't suffer. This article is from a new angle of -RMB effective exchange rate. Do innovative research on the economic effects of RMB effective exchange rate from two innovation aspacts of the application of econometric methods and research content. Article widely adopted threshold cointegration, ardl model, factors augment vector regression models, and discussed the frontier approach that how RMB effective exchange rate adjustment virtual economy and real domestic economic imbalance effect. However, due to the limited and data available words sexual problems, based on the study of process also to have some unresolved problems in the future, need to research continue to complement and perfect in this field.