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Exchange Rate Alteration, Trade Unbalance And Policy Choice: Empirical From China

Posted on:2008-12-17Degree:DoctorType:Dissertation
Country:ChinaCandidate:Y ZhouFull Text:PDF
GTID:1119360242479096Subject:Finance
Abstract/Summary:PDF Full Text Request
At the background of trade surplus rising rapidness and foreign exchange reserve going fast, more and more people focus on the problem of re-arrangement of RMB exchange rate. The center bank made announcement that reform RMB exchange rate come into being mechanism in July 21, 2005, in order to adjust trade unbalance, decrease trade friction. After that, the exchange rate between RMB and USD continue to high, up to date the range of the appreciation to USD is more than 4%. Unanticipated, the pattern of trade unbalance become more and more serious. Under such condition that people wonder that the range of appreciate is too small? How to solve the problem about the mint trade surplus?In the current era, rising debates develop over China's trade surplus and re-arrangement of RMB evaluation. This justifies a revisit to the literature on the relationship between exchange rates and trade balances, a classic in international economics. In general, there are two categories of models: partial equilibrium and general equilibrium models. In particular, the literature develops over the following path: static partial model—dynamic partial equilibrium model—dynamic general equilibrium model—stochastic general equilibrium model. The general equilibrium approach extends the partial equilibrium approach, which assumes others unchanged and only examines the relationship between exchange rates and trade balances.The paper try to introduce the new theory and the empirical research about the relationship of exchange rate and trade surplus, and then probe into the relationship of exchange rate and trade surplus based on a dynamic general equilibrium model. We could open out the resource and reasons of the continuance trade surplus, and then put forward the policy advice.After the introduction at the first chapter, the second one retrospect system the exiting theory evolution about exchange rate and the trade surplus over the following path: static partial model—dynamic partial equilibrium model—dynamic general equilibrium model—stochastic general equilibrium model. The paper have the idea that the partial equilibrium model such as the Marshall-lerner condition, Laursen-Metzler effect and the J curve etc. is worse than dynamic partial equilibrium model based on the stride-period optimize approach, but they provide many views about dynamic general equilibrium model. For this reason, we take advantage of the Marshall-lerner condition , Laursen-Metzler effect and the J curve etc, and then give the introduction in the following chapter.On the base of dynamic general equilibrium model about Hoffmaister and Roldos (2001), the forth chapter layout the empirical certificate about RMB exchange rate and the trade surplus. In fact the normal exchange rate is used in practice, but it doesn't effect the real change condition about the value of RMB. So this chapter compute RMB real effective exchange rate by the relevant data. I study the effects of RMB exchange rate on China's trade surplus using a Structural Vector Autoregressive (SVAR) model. Use the monthly data from Jan, 1995 to Dec, 2006.From above the theory analysis and the empirical certificate, we conclude that the limited effect from exchange rate to the trade surplus. In order to search trade unbalance effective approach, we must analysis the different resource and reasons about trade surplus. The fifth chapter give three approaches discuss the resource and reasons of the trade surplus such as trade mode, country distributing and commodity structure, and structure a general analysis frame to detail the reason of trade surplus.At the end of the paper, we conclude the policy suggestion that our government should following the inside-outside economic equilibrium logic frame to seek the corresponds policy combination when trade surplus ascend continual which lead to the huge foreign exchange problems. Besides adjusting RMB exchange rate, the Chinese government needs to seek alternative solutions such as rectify the policy of encourage the export and restrict the import, and make progress in stimulate the inner-demand to dealing with the rising trade surplus and the associated huge foreign reserve.
Keywords/Search Tags:RMB exchange rate, trade surplus, inside-outside economic equilibrium
PDF Full Text Request
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