The Research Of RMB Real Effective Exchange Rate Misalignment: BEER Model

In recent years, the controversy of the RMB exchange rate has never stopped. Especially, the July 21, 2005, after the exchange rate system reforming, the real effective exchange rate of RMB rate continues to appreciate. This paper is based on China's national conditions and use BEER model to research the RMB real effective exchange rate. By measuring the deviation's degree of the RMB real effective exchange rate and equilibrium real exchange rate, we get the misalignment situation of the real effective exchange rate of RMB. At the same time, we have measured that the RMB appreciation can bear Spaces and whether the changes of RMB exchange rate are reasonable. At a managed floating exchange rate system. We should be how to respond to international and domestic economic impact of RMB appreciation.After this paper expounding the basic theory of RMB real equilibrium exchange rate, we will focus on using BEER model to analyze the misalignment of RMB real effective exchange rate. At the process of measurement, we use a number of statistical methods. For example, ADF, cointegration tests. We get the cointegration equation of all variables. Through analyzing the various variables'pulse diagram, we got that the most basic economic facts of impact are bi and m2. Their changes bring a lot of volatility to real effective exchange rate of RMB. However, the fluctuations of real effective exchange rate of RMB had a great impact to the Chinese economy. So, we need to stabilize the real effective exchange rate of RMB. Its way is to set up the RMB exchange rate target zone. Through controlling the changes of various economic variations, the fluctuations of the RMB exchange rate are restricted in the target zone.Now, if RMB is moderate appreciation, as long as the exchange rate is target zone, it is favorable to promote China's industrial structure adjustment and economic restructure.