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Influence Of Floating Exchange Rate Regime On A Country's Economy

Posted on:2012-09-10Degree:MasterType:Thesis
Country:ChinaCandidate:H GuoFull Text:PDF
GTID:2219330338999999Subject:Finance
Abstract/Summary:PDF Full Text Request
This paper tries to figure out what effects will be created on China's major economic variables if the exchange rate becomes free floating. During the past several years, there are a dozens of times when the USD– RMB exchange rate was relatively significantly adjusted. During the adjustment, we could view the USD– RMB exchange rate as quasi free floating. Because during this time the government removes its regulation from the market, and let the exchange float in its way. So those quasi-free floating periods provides historical data and this paper tries to figure out what changes had taken places during those quasi-free floating periods and answers the question mentioned at the beginning. Thus empirical studies were done and the results show that the linear relation between changes in USD– RMB rate and changes in average price level is significant. But since the possibility of spurious regression exists, that linear relation is not confirmed here. Empirical results also show that to some degree, the changes in exchange rate has influence on China's net export to the US, and has little influence on China's total net exports, M2, lending interest rate and house price. Another empirical analysis was done showing that the change of USD– RMB exchange rate has a significant linear relation with the change of percentage that China's exports of"general wears category"goods account for in China's total exports to the US.
Keywords/Search Tags:floating exchange rate, net exports, trade structure, price
PDF Full Text Request
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