The Impact Factors About Real Exchange Rate Of Emerging Market Country

In order to analyze the factors affecting the real exchange rate of the emerging market countries, and to explain why the relationship of real exchange rate and productivity growth doesn’t meet the Balassa-Samuelson Hypothesis, this research modified the model of Balassa-Samuelson Hypothesis and made an empirical analysis of historical data. By means of modifying the assumption and deduce process of theoretical model, the modified model of BSH in this study fits the economic reality of emerging market countries better. Then examine this modified model by empirical analysis using panel data model, which include the data of China, Korea, Philippines, Indonesia, Singapore, Thailand, and unit root test of panel data with structural break point. The results point out that because of the unequally allocation of the profit in international trade, the increase of production in the emerging market countries will push the wage level of western countries higher than the wage level inland, which makes the real exchange rate experience a depreciation. Thus this research explains the relationship between Real Exchange Rate and growth rate of productivity, provide a new vision about Real Exchange Rate study.