The Effect Of Capital On Invest Return On Real Exchange Rate

The real exchange rate is an important index to measure the eco-nomic relationship between the period of economy,reflects the economy between the fundamental factors and changes in the basic price in the form of the relationship between economic variables in external market to regulate and guide the rational flow of resources.The closer integration of economic development and external environment,the more important the role of the real exchange rate adjustment.Since 1990s,China has car-ried out the two exchange rate system reform.Especially the second re-form of exchange rate system in 2005,not only let the RMB exchange rate pegged to the dollar,to implement based on market supply and de-mand with reference to a basket of currencies,a managed floating ex-change rate system,the RMB exchange rate formation mechanism reform has taken a big step,also going to the market.After the reform,the vola-tility of the RMB exchange rate increased,the overall performance of the upward trend of volatility.The relative stability of the exchange rate of a country is very im-portant to the growth of a country's economy.In China,GDP has a large proportion of investment.Since 90s,the rate of return on capital in China is still at a high level when the investment rate is rising,which is not con-sistent with the marginal benefit of capital investment,which is consid-ered by the classical economic theory.During this period,there is a simi-larity between the higher rate of return on capital and the change trend of RMB real exchange rate.Therefore,it is of great significance to study the correlation between the return on capital and the real exchange rate.In this context,this paper is divided into six parts.The first part ex-plains the background and significance of this study,as well as the analy-sis method and the structure of the article.The second part reviews the relevant literatures on the real exchange rate,which is the most important theoretical achievement of the real exchange rate,the Lhasa Samuelson effect and the revision and supplement of it.After that,according to the reality of our country,the main Israeli Palestinian Sa effect in our country as a standard for the study of the real exchange rate of the relevant litera-ture.The third part is the theoretical foundation for the research in two aspects,starting from this part of the main foreign direct investment and capital flow mechanism of the transmission mechanism,the rate of return on capital in the real exchange rate is more clear.The fourth part intro-duces the present situation of China's capital return rate and the long-term trend of RMB real exchange rate,and makes a simple analysis.The fifth part is theoretical basis before the introduction of the rate of return of capital to the real exchange rate on the macroeconomic data,select the relevant variables on the rate of return on capital affect the transmission mechanism of the real exchange rate by empirical analysis.The main analysis method is based on the VAR model and cointegration analysis and vector error correction.The sixth part summarizes the conclusions of this study,and the research on the real exchange rate.The results show that there is a co integration relationship between the rate of return on capital and the real exchange rate,this relationship mainly through the combined effects of the rate of return of capital and foreign direct in-vestment,capital flows out;and in foreign direct investment and capital flows two mechanism,China's capital return rate and the real exchange rate of RMB is that is,the rate of return on capital increase will cause the RMB real exchange rate appreciation.