Empirical Research On RMB Exchange Rate With Purchase Power Parity Theory

Based on the review of the previous empirical research of RMB exchange rate with purchase power parity, the article testified the comparative purchase power parity of RMB from 1995 to 2004 by cointegration method, concluded that in this period comparative purchase power parity did not suit for RMB exchange rate, analyzed the reason of it, pointed out it was not appropriate to evaluate the equivalent exchange rate with purchase power parity, and revealed that foundermental factor for short-term RMB exchange rate determination was policy leading and the reform direction in the long run was to set up more flexible exchange rate mechanism.JEL Classification:F31...