Research On The Reationship Among The Rmb Exchange And Interest Rate Gap Domestic And Overseas And Hot Money Flows

With the integration of the current global economy,liberalization of finance and increasing abundance of the international securities and financial derivatives,the flow of international short-term capital has become the norm.As the representative of the short-term speculative capital,hot money has been the focus of attention for emerging market in the process of financial liberalization.The flow of large-scale hot money have a significant impact on the country's economic development,foreign trade and financial policies,once reversing,outflows of hot money will seriously affect a country's market stability and financial order.From the practice of China's economic development,hot many has been coursing through the nation as the growth of China's economy since 2003,the continued strong expectations of the Yuan from the exchange rate reform in July 2005 and also the developed country's quantitative easing policy under 2008 financial crisis.But with the confidence waning of the emerging market outlook,hot many began to outflow from 2011 and the flight significant expanded these years which leads to great pressure on China's macroeconomic policy formulation.At the same time,gradually disappear of the capital control weakens the protection barrier makes the study of the hot money and regulatory needs more urgent.General idea of this paper is the qualitative and quantitative research on the motivation of the hot money flow.First,based on the concept and logic of hot money,interest rate gap and exchange rate gap,relationship between the three in recent years was described and analyzed.And the hot money scale since 2011 was estimated by three methods.The results have certain difference but the overall trend is similar.Second,the paper focused on the interest rate gap between China and the United States and the RMB exchange rate gap domestic and overseas using the granger causality test,cointegration test,VEC model to do empirical analysis from October 2006 to December 2015.Results show that:(1)the exchange rate gap which represents the expected Renminbi appreciation is the main reason for the hot money flows,the interpretation contribution to the hot money fluctuations is 12.35%.(2)In contrast,the enlargement of the interest gap between China and the United States also leads to the hot money inflows,but less affected,the main reason lies in the more complex transmission mechanism.Interest rate increase will affect the the price of real estate,in turn,to a certain extent have a "push" impact on hot money inflows.(3)Changes in interest rate gap has effect on the exchange rate gap,interest rate parity theory have applicability in China.(4)Hot money enters into the real estate market,contributing to surge of the real estate prices.