| Having compared and appraised some main exchange rate theory, the paper chooses the behavior equilibrium real exchange rate models as theoretic guidance, referenced the experience and conclusion of the empirical research covering the RMB behavior equilibrium real exchange, chooses major fundamentals that may be related to behavior equilibrium real exchange rate, using Johansen Cointegration test, analysis annual data from 180 to 2005 and construct a model of equilibrium real exchange rate. In the model, there are three fundamentals determined, they are labor productivity,terms of trade,real money supply. Based on above efforts, I use the Hodrick-Prscott filter to smooth the economic fundamentals and get the "sustainable" values of the RMB equilibrium real exchange rate. Therefore, the RMB equilibrium real exchange rate and the misalignment are also calculated.At same time, I get a conclusion that the RMB real effective exchange rate has always fluctuated with around the equilibrium real exchange rate, and experienced different overvaluation and undervaluation. Finally, I declare and prove that the RMB equilibrium real exchange is under in long term appreciation phase. |
