Empirical Studies Of RMB Equilibrium Exchange Rate

The RMB exchange rate issue has been one of the hot issues of concern in theinternational community. Financial crisis swept across Asia in1998, and for the maintenanceof the stability of Asia and the world economy, China has adopted a strategy not to depreciate.This approach makes the countries in the world to cast praise, they think this approach is thedevelopment of self-sacrifice on the domestic economy. However, since2002, many countriesof the RMB exchange rate and holding another attitude. In their view, the RMB exchange rateis undervalued for a long time, in order to maintain China’s trade surplus.The2008economic crisis has made many developed countries, the economy sufferedseverely Since then, the European countries are also affected by the debt crisis. In order tosave their own economy, the United States launched a three economic stimulus plan, theEuropean countries have launched economic self-help, Japan’s quantitative easing policy isalso brewing, and these must be achieved through the issuance of currency, which will directlylead to them the devaluation of the local currency. A new round of currency wars muchexplosive potential, China wants immune impossible, the RMB exchange rate go heartstringspulled the world. Therefore, the estimated RMB equilibrium exchange rate adjustment thatChina’s exchange rate system provides a basis for decision making, which has become animportant theoretical and practical issues.This article learn from behavioral equilibrium exchange rate model (BEER), sample dataselection of the1quarter of1994to the second quarter of2012, building a model include tradeopenness, net foreign assets, the relative labor productivity, terms of trade and governmentspending five decision factors. The basis of this article using cointegration analysis method derived RMB equilibrium exchange rate estimation formula and HP filter analysis to extractthe long-run equilibrium value of each variable to be substituted into the formula estimatesobtained RMB equilibrium exchange rate.further compare the real exchange rate andequilibrium exchange rate, know the period of exchange rate misalignment, use VEC modelto explore the self-correcting mechanism of the RMB exchange rate.The basic conclusions of this paper research is:①Trade openness, net foreign assets, therelative labor productivity, terms of trade and government spending affect the equilibriumexchange rate of RMB basic economic variables.②The RMB exchange rate self-correctingmisaligned exchange rates alone can not be self-correcting through the foreign exchangemarket.③The level of the RMB exchange rate basically in line with China’s nationalconditions, there is no "seriously underestimated".④The independence of the RMB exchangerate needs to be strengthened. Finally, this paper also proposed to the steady expansion of theRMB exchange rate flexibility, strengthen the independence of the exchange rate formationmechanism, and further optimize the industrial structure and the establishment of a soundmacroeconomic policy recommendations of the regulatory mechanism.