The Study Of RMB Equilibrium Exchange Rate Under Asymmetric Market Power

Under the background of opening global economic,whether a country's exchange rate is in a balanced range plays an important role in efficient allocation of resources and the steady and sustainable development of the economy.The determination of equilibrium exchange rate and the judgment of the degree of exchange rate misalignment are not only the basis for the formulation of exchange rate policy and the adjustment of exchange rate level,but also an important basis for coordinating the economic policies internationally.By comparing and studying the economic development of China and the United States,it is found that Chinese and American manufacturers have asymmetric market power in the international product trading market.This is mainly manifested in China exports the labor-intensive products as the main,export products almost completely competitive-not only facing competition between domestic manufacturers,but also facing competition from the manufacturers in Southeast Asia.But the United States export the capital-intensive and technology-intensive products as the main,export products have a certain monopoly power.The asymmetry of market power has a great influence on the decision of equilibrium exchange rate,because asymmetric market power will lead to different pricing strategies.So this paper adds the hypothesis of asymmetric market power,constructs an inter-temporal model of RMB equilibrium exchange rate under the framework of new open-economy macroeconomics(NOEM),which is more realistic and more microcosmic,and explores the determinants of equilibrium exchange rate.Based on the above theoretical analysis,this paper uses Co-integration analysis and error correction model to test the long-term and short-term influencing factors which have effect on the real exchange rate,and peel off variables' cyclical effects by H-P filtering method,test the extent of deviation from the equilibrium level of the real exchange rate of RMB against dollar quantitatively between 1985-2016,and analysis the reason of the imbalance in different periods.The main conclusions of this paper are as follows:The increases of the nominal exchange rate of RMB against the dollar will increase the real exchange rate,while the increase of China's consumption of domestic trade and the ratio of consumption to non tradable goods in China and the United States will make the actual exchange rate drop.From 1985 to 2016,RMB showed a trend of overvaluation and underestimation.In different years,the deviation of the real exchange rate of RMB from the equilibrium level is different,but the degree of the RMB real exchange rate misalignment is not high,which is less than 15%,except a significant overvaluation in 1989 and a significant underestimation in 1994.The year in which RMB was overvalued occurred in 1988-1990,1995-2004 and 2007-2015.The year in which RMB was underestimated occurred in 1986-1987,1991-1994(except 1993)and 2005-2006.And the error correction coefficient of residual error in the error correction term is negative.When the short-term fluctuation deviates from the long-term equilibrium,it will adjust to the opposite direction and return the exchange rate to the equilibrium state.Overall,during the 1985-2016,the misalignment of the RMB exchange rate tends to be stable and adjusted within a certain range of misalignment.