The Theoretical And Empirical Research On RMB Equilibrium Real Exchange Rate

Equilibrium exchange rate as one of the core issue in the exchange rate theory,provides a main objective basis for judgment whether the exchange rate level is reasonable and the necessity of the exchange rate policy adjustment.The paper profits from the western behavior equilibrium exchange rate theory,according to Chinese actual situations and the available data,selects four basic economic factors including trade terms \ net foreign asset \government expending level and openness as independable variables,and uses modern econometric tools and co-integration methods such as ADF unit root test,Enger-Granger two steps\Error Correction Model(ECM) model and Hodrick-Prescott filter to construct RMB equilibrium real exchange rate model based on seasonable data from the first season of 1994 to the last season of 2007,and computes RMB equilibrium exchange rate and the degree of misalignment.The result of computation indicates that both RMB real exchange rate and equilibrium real exchange rate face the trend of appreciation in the long-term,and RMB real exchange rate fluctuates around the equilibrium real exchange rate all the time.But the ability of self-revising of RMB is weak,experienced overvalued and undervalued in different degree.From 1994 on,RMB real exchange rate is mainly in a state of undervalued.The state of RMB exchange rate undervalued become better after 2005 RMB exchange rate system reformation.Especially 2007 later, RMB real exchange rate has a little overvalued.In sum,it is not necessary for RMB exchange rate to appreciate in big step.The paper also explores the reason of exchange rate misalignment,and conducts the empirical research on the effect of the exchange rate misalignment to Chinese foreign trade.The result indicates exchange rate misalignment increases the state of foreign trade unbalance in some degree,but it is not the main reason.In the end,the paper points out the best way of keep exchange rate equilibrium is to further reform present RMB exchange rate regime,and brings forward the relative policy suggestion,such as establishing the system of estimation and computation of RMB equilibrium exchange rate.