The Computation Of Long Run Equilibrium Exchange Rate Of RMB And The Quantitative Analysis Of The Short Term Fluctuation Of RMB Real Exchange Rate

Theoretical models related to equilibrium real exchange rate mainly include fundamental factor, natural equilibrium and behavior equilibrium real exchange rate models. The theoretical models of representative equilibrium realistic exchange rate in developing countries primarily are Edwards, Elbadawi and Montiel models. Having analyzed western equilibrium exchange rate theories, utilizing the model of Behavioral Equilibrium Exchange Rate(BEER) as theoretic guidance, regarding the basic idea of Edwards's and Elbadawi's developing country models and choosing explanatory variable of basic economic factors on the basis of Chinese macroeconomic and financial conditions, the paper establishes RMB equilibrium exchange rate model using the econometric method of Johansen Co-integration Model to compute RMB equilibrium exchange rate, and then inferring the misalign of RMB real exchange rate, so the conclusion can prove the importance of the role of the market when perfecting the exchange rate mechanism. At the same time, in order to increase the accurateness of the short term management by the monetary authority, the paper establishes the Error Correction Model utilizing the RMB real exchange rate and the mentioned factors on the basis of the Johansen Co-integration Model, so it can then analyzes the economic factors'short-term influences to the RMB real exchange rate and computes the speed of the automatic adjustment by the misalign in the current term to the equilibrium exchange rate in the next term. At last, the paper provides some policy suggestions of long and short term interventions to the RMB exchange rate on the basis of the paper's conclusions.