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The Direction And Route Of The Choice Of RMB Exchange Rate Regime

Posted on:2006-10-29Degree:MasterType:Thesis
Country:ChinaCandidate:H GuoFull Text:PDF
GTID:2156360152470171Subject:Western economics
Abstract/Summary:PDF Full Text Request
Since the second half year of 2002, the world opinion headed by America and Japan has been setting off a tide of demanding appreciation of RMB. Thus the RMB exchange rate has been becoming the focus of debate among domestic and international scholars. But the more important thing is which kind of exchange rate regime RMB should choose. China's present exchange rate regime, so-called "manage floating regime" is actually a fixed rate regime pegged to US dollar which will expose more and more defects and become unsustainable during the process of China's further opening-up. Therefore, RMB exchange rate regime needs to be reselected.Theory abroad about the choice of exchange rate regime is varied. At present there's no consensus on the subject that which kind of exchange rate regime is the optimum one for one country. Also each kind of existing exchange rate regimes all has its own supporters. The domestic argument on the choice of RMB exchange rate regime is also varied. This paper is based on "Trilemma" which is induced from MF model. In order to overcome MF model's inherent defects, this paper constructs a static model headed by government on choice of optimum exchange rate regime. Through the analysis of the model we can see that the choice of exchange rate regime is a dynamic process should be decided in real situation. No single exchange rate regime is right for all countries or at all time. Under certain condition intermediate regime may be the optimum one, but the possibility will decrease with the increase of international capital flow. The optimum exchange rate regime will ultimately go to bipolar exchange rate regimes.Although the conclusion of the model can't give us a clear answer on which kind of exchange rate regime RMB should choose, we can get some revelation from it. This paper makes thorough probe into short-term, midterm and long-term choice of RMB exchange rate regime. RMB exchange rate regime will finally choose floating exchange rate regime with the realization of the free flow of international capital. The exiting way should be gradual and China should not be hurry to proceed to the innovation of exchange rate regime because it's not qualified to float freely over a long time. What China should do now is take a series of measures for the preparation of exiting from the present exchange rate regime; In midterm, exchange rate target zone regime is a the best choice for us, this paper makes a preliminary analysis on theconstruction of RMB exchange rate target zone regime.
Keywords/Search Tags:RMB exchange rate regime, Trilemma, Intermediate regime, Bipolar view, Target zones
PDF Full Text Request
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