Maladjustment Of Equilibrium Exchange Rate And Influence On Imports And Exports Of China And America

The target of RMB exchange rate reform is to keep RMB Exchange rate stable on equilibrium exchange rate. According to this requirement, we must first definite equilibrium exchange rate if we want to judge whether the level of RMB exchange rate is reasonable. Adjusting practical exchange rate to fit equilibrium exchange rate is a core task in open macroscopic economy. It not only relates the continuity of a country external income and expense, but also is the essential ensure of stabilizing domestic economy and promoting continuous economy growth(Montiel and Hinkle ,1999).REER subtracting equilibrium exchange rate equals maladjustment of equilibrium exchange rate. There are two trends to research equilibrium exchange rate .One is based on time series; the other is on section series. The demonstration theories of measuring equilibrium exchange rate by time series include PPP,FEER,BEER,NATREX and ERER. Many scholars measure the maladjustment of equilibrium exchange rate. But they don't have identical conclusions. Balassa-Samuelson effect is the most well known theory studied through section series. This text summarizes the research instances of different scholars in order to offer some judgments for later study. Basing on BEER model , this test measures the maladjustment of equilibrium exchange rate according to the situation of our country to choose variables , adopting ADF test,Engle—Granger,ECM and H—P methods. In our country, the range of short maladjustment of equilibrium exchange rate is small. In the long time, REER experiences different overestimate and underestimate since 80th of twentieth century. REER fluctuates around the equilibrium exchange rate.In a open macroscopic economy system, export is the important engine of promoting economy growth .The direct and important variable of impacting export is exchange rate. Analyzing how maladjustment of equilibrium exchange rate will influence economy development is of utmost importance. America is the most important trade associate of our country; therefore, this text analyzes how maladjustment of equilibrium exchange rate influences imports and exports through establishing imports and exports demand model, adopting H-P method. Fundamental conclusions are maladjustment of equilibrium exchange rate brings small impact on imports and exports. American and Chinese national income will bring big impact on imports and exports. At the same time, this text adopts Granger Causality to verify above conclusion.