Research On RMB Behavioral Equilibrium Exchange Rate

With the increasingly development in economy and elevation of the status in the world in recent years, the topic on Renminbi's equilibrium rate has become the world's focus. During the tough time of Asia economy crisis in 1997, there was much extraordinary anticipation about the devaluation of Renminbi. However, when China gets out from the shadow of crisis and begins a new growth at high speed, the very appreciation anticipation becomes upsurge especially after the year 2002. So whether it is overrated or it is underrated and the consequence of these two estimations relatively can not get to unification yet. Considering the above situation, this paper will study on the equilibrium rate as well as the maladjustment of Renminbi, using the international method and thought of behavioral equilibrium exchange rate for reference.Firstly, in this paper we clasp the core-line, the inner-outer equilibrium, and expatiate the history of equilibrium rate in detail. Basing on this, we find that the single macro determined factor of the equilibrium rate has expanded to multi and micro ones gradually. Then what are the particularly ones of the numerous factors having the most important effect on the equilibrium exchange rate in the particularly time? How to measure the effect that every factor plays? What is the difference between the nominated exchange rate and the estimated one basing on the above factors? All these are concerned by the economists, but shortcoming of the former analysis. Recently the method called behavioral equilibrium rate begin to arouse attention. This theory abstracts the realistic economics factors at the aim to analysis the equilibrium level from the angle of real development of economy. Because that it has a tight link with realistic economy, employs the modern econometrics method named co-integration test in the experience study, and has a strong explanation, many scholars begin to be interested in it. Our paper is also founded on it.Secondly, the Renminbi's equilibrium rate model is set up on the base of behavioral equilibrium rate model. The key problem is the choice of variables. In this paper, we choose certain essence factors to form this estimating model according with our nation's reality. And the biggest difference lays in the variable of labor productivity. In Peter B Clark and Ronald MacDonald's model, the select of labor productivity is founded on the hypothesis of Balassa-Samuelson Hypothesis, which declared that the equilibrium rate is determined by the difference of price between the tradable good and the non-tradable good in two countries, and this difference can be substituted by the ratio of trade price and consumer price. However, this paper does not think the hypothesis is true in our nation in the long run.Thirdly, the Renminbi's equilibrium rate model is tested by experience analysis from three angles of long, medium, and short term. And we add the dummy variable of policy effect in the long run test considering the structure break-point caused by the reformation of the exchange rate system. In the medium term test we employ the impulse respond forecast analysis to validate the forecasting function of equilibrium rate model. When we come to the short term, micro variables are chose, and the reason is double folds: the first is to test the model's applicability and the second is to broaden the vision of the research.Fourthly, the concept of multi- equilibrium is introduced in the research of Renminbi equilibrium rate. From the former analysis we find that though the real exchange rate does depart from the equilibrium one at certain degree, there is still multi- equilibrium between the Renminbi exchange rate and the economic growth considering the stage of our nation's development and the goal of inner-outer equilibrium. However, the behavioral equilibrium exchange rate model can not cover this. But the theoretic model, founded on the classical endogenous economic growth model, expatiates the multi- equilibrium in the further step and tests the model using chow breaking-point test.Fifthly, this paper further analyses the fluctuation of RMBrecently, points out the difference between nominal exchange rate and real effective exchange rate, analyses economic effect of miseliement of exchange rate and explores the essencial of revaluation outside and appreciation inside of RMB, at last, prents the relative surgeestionThe research on behavioral equilibrium exchange rate delvelops field of vision about RMB problem research, emphases multi-varables co-effect on exhange rate.The approach and result of empirical test will help people have more clear understaning, and introduction of multi-equilibrium enlarge the meaning of equilibrium theory, impulse the research of this theory,provide the theory evidence and it is important for deep study of equilibrium exchange rate theory.