| With more than 30 years of reform and opening up, China's economy has become the world's second-largest economy. At the same time, China has become the largest trader and exporter of goods among the world. In 2015, the gross trade value of China is at the top of the world and the market share in the world's export will reach 13%. In December 1st of the same year, the International Monetary Fund announced the RMB would be drafted in the SDR basket, so Yuan is recognized as the international reserve currency with dollar, euro, yen and pound. RMB, as the international trade currency and the international reserve currency, is required to maintain the stability of value. However, after the 2008 financial crisis, the global is experiencing the economic recovery. China also faces the pressure of the slowing of economic growth. The growth rate of China's GDP declined from double digit to 6.9% in 2015 and the expectation of the devaluation of RMB is reinforcing. On August 11,2015, the people's bank of China adjust the exchange rate formation mechanism of central parity of RMB, further increasing the RMB exchange rate's fluctuations in the foreign exchange market. Therefore, clarifying the impact of RMB exchange rate's influence mechanism on the main macroeconomic variables is particularly important. After reviewing the scholars of domestic and abroad in this paper, by constructing dynamic stochastic general equilibrium model to analyze the impact of RMB exchange rate on China's macroeconomic variables, the influence mechanism, the following main points are concluded:When the system is shocked by the authenticity, the impact of cosmopolitan positive shock and domestic positive technology shock ton the real exchange rate maintains differences. Positive shock technology will lead to the two countries'national output fall, commodity prices fall, the inflation rate drop, interest rates rise and etc. in the model. However, the effect is temporary. With the spread of new technology, its spillover effect will cause the overall technical level rise, so that the state of the economy will be back to near the equilibrium. When the positive technology shock occurred to the domestic market, the domestic output increases. However the shock will have a negative impact on foreign output. At the same time, the domestic price level will fall, interest rate also fall, exchange rate, commodity prices will drop in the foreign market, and interest rates in the short term small will drop slightly. When the system is shocked by positive technology abroad, the conclusion and the influence of domestic technology shock is reversed. Although the positive shock t purchased by the domestic government has great positive influence to the domestic output, it will lead to the devaluation of the real exchange rate. At the same time, it will lead to tiny influence on foreign output and interest rates. However, the short-term boost on demand has not improved the production efficiency in the economy.When the system is subjected to nominal shock, the impact of the interest rate shock on the real exchange rate is greater than the nominal exchange rate shock impact on the real exchange rate. A negative impact by domestic interest rates will lead to the improvement of the domestic production and consumption and the deterioration of the output and consumption abroad. Although foreign interest rates also fell, the size will be very small owing to the mechanism of interest rate parity, which cannot make up for their foreign falls in output caused by lower interest rates. As a result, the nominal exchange rate will have a great depreciation, and the real exchange rate would rise because of rising domestic price level. Foreign interest rates appear negative impact situations similar to the above analysis, but the effect is difference, this is mainly due to fact that in the model the probability of price adjustment in China commodity market is higher relative to that in the foreign market, this asymmetry lead to the difference in the conduction of exchange rate changes to the trade commodity price changes.Based on the above research, this paper put forward policy suggestions as follows:Guide the RMB exchange rate to reflect market supply and demand, further establish long-term effective mechanism of marketization of exchange rate to adjust the balance of payments, promote the surplus of the current-account to the absolute size and the ratio of current account surplus to GDP synchronization to reduce. Maintain the marketization formation mechanism of RMB exchange rate, and avoid big fluctuations in the market exchange rate. At the same time, gradually improve the relationship between RMB exchange rate formation mechanism, the interest rate market, and capital account convertibility. Strengthen the coordination between the reform of RMB exchange rate formation mechanism, the price of resource products and the economic structure. The foreign exchange market will be further developed, and the international use of the RMB will be promoted to actively to encounter the challenge of the cross-border capital flows and strength the prudent macro financial regulation. |
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