Empirical Analysis Of RMB Equilibrium Exchange

This thesis by drawing on the IMF McDonald behavior equilibrium exchange rate theory(BEER), and combined with our country’s basic national conditions and the actual situation, wehave established a BEER correction model, modified model of the BEER related literature, weselected four basic economic factors related BEER correction model conditions: terms of trade(TOT), labor productivity (PROD) money supply (M2) and net foreign assets (NFA). This thesisusing quarterly data for1994-2012, the basic economic variables, integrated use of econometricmethods, estimates the offset position of the RMB Equilibrium effective exchange rate.Estimation results of the unit root test, cointegration test, impulse response measurementmeans of regression, a combination of these data are: basic economic variables in the terms oftrade, labor productivity, the amount of money supply and the net external assets of theparameters of the real effective exchange rate of RMB a great degree of influence, and to gettheir long-term stable equilibrium relationship. RMB equilibrium exchange rate point of viewfrom the general direction of the degree of exchange rate misalignment is not serious andbecoming more balanced with the deepening of reform and opening: The first phase (1994Q1–1997Q2), China’s overheated investment because of the economic the impact of the realeffective exchange rate of RMB presents with a certain proportion of underestimated the level(about5%), after a soft landing of the economy so that the level of undervaluation eased; secondstage (1997Q3–2002Q2) due to Asia the impact of the financial crisis, the RMB adhere not todevalue, the real effective exchange rate then presented to about10%overvalued; third stage(2002Q3–2007Q4), due to China’s sustained and rapid economic development, the realeffective exchange rate of RMB is presented a consistently underestimated the state; fourth stage(2008Q1–2012Q4), China’s exchange rate system gradually liberalized, the real effectiveexchange rate is close to the equilibrium level. Finally, this paper gives some policyrecommendations to improve the RMB exchange rate on the basis of this study.