RMB Real Exchange Rate Misalignment Of Empirical Analysis

Under the conditions of modern open economy, whether the exchange rate of a country’s currency is appropriate or not, is very important to steady and rapid development of the country’s economySince the exchange rate reform in2005, the exchange rate of RMB appreciating continued, along with the volatility increases gradually. But in recent years, the pace of appreciation of the RMB exchange rate slows down. In this context, the research of whether the exchange rate of RMB reached a balanced level and economic utility of actual dislocation degree of the RMB exchange rate, are of great significance to stability and sustainable development of China and even to world economyThe exchange rate reform began in2005determined that China has implemented " a managed floating exchange rate system based on market supply and demand and with reference to a basket of currencies. Since then, the exchange rate of RMB is no longer pegged to the U.S. dollar, but forms a more flexible exchange rate mechanism." The introduction of the reform had a significant impact on global financial market, the flexibility of the exchange rate of RMB becomes larger, and market-oriented exchange rate formation mechanism can be further refined.. In the same time, the2008U.S. financial crisis and the European debt crisis in2009makes the overall growth of the world economy into a downturn and makes the external economic situation more complex, which all have a significant impact in the process of reform of the exchange rate of RMB. For these major changes, how to conduct in-depth analysis of the economic impact of the RMB exchange rate misalignment makes sense. Therefore, this paper will focus on specific analysis and in-depth research in the impact of the RMB exchange rate misalignment problem to China’s macroeconomic since the exchange rate reform in2005.The beginning of this article is the introductory section details the research background, research objectives and content, research methods and innovation. The body is mainly composed of five parts, specific framework are as follows: The first chapter is the basic concept and Research. Firstly, describes basic concepts of the real exchange rate, the real effective exchange rate, the equilibrium exchange rate and the exchange rate misalignment. Then, review the course of the evolution of the RMB exchange rale regime since the reform and opening up. Finally, generalize research literature of the real exchange rate misalignment.The second chapter is to calculate the real exchange rate misalignment of RMB. Firstly, introduce and explain the behavioral equilibrium exchange rate method used in this paper detailed. Then explain the reason of selection of basic economic variables used to calculate the real equilibrium exchange rate of RMB. Finally, estimates the equilibrium exchange rate and the degree of dislocation of the real exchange rate by the use of seasonal adjustment, the ADF test and GARCH model method, and then use the H-P filtering method to get the long-term factors of economic variables and estimates the total actual exchange rate misalignment. The third chapter is to analyze the economic effects of the real exchange rate misalignment of RMB. I mainly study the impact of real exchange rate misalignment on economic fundamentals variables from both theoretical and empirical point of view.The forth chapter is to conduct horizontal comparison. Firstly, retrospectively review the reform of the exchange rate regime in India. Then measure and analyze the actual degree of exchange rate misalignment after the exchange rate reform in India. Finally, describe India’s exchange rate misalignment problem, and give related reference and inspiration.The fifth chapter is conclusions and recommendations. Firstly, summarize the conclusion of this paper, and then present related recommendations. Last but not the least; put forward feasible suggestions on further research.