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The Effect Of Real Effective Exchange Rate And Population Age Structure On Current Account Balance

Posted on:2019-12-31Degree:MasterType:Thesis
Country:ChinaCandidate:D D ZhouFull Text:PDF
GTID:2417330566993708Subject:applied economics
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Since 1994,China's current account has maintained a continuous surplus of 23 years.As for the reasons for the continuous current account surplus in China,the major international consensus is that the Chinese government has manipulated the RMB exchange rate so that the value of the RMB is seriously underestimated,resulting in a more competitive Chinese export product.However,since the "Exchange Reform" in 2005,the RMB began a slow appreciation process,the pattern of China's current account surplus has not been effectively improved.From the studies of many scholars at home and abroad,we can find that as a long-term and important factor to the economy,the impact of the change in population age structure on the balance of current account of a country can't be ignored.Since the implementation of the family planning policy,the population age structure of China has undergone significant changes.Therefore,this paper mainly studies the effect of real effective exchange rate and population age structure on current account balance.First,we use the annual data from 1982 to 2016 in China to describe the relationship between the three.Then based on the intertemporal consumption smoothing model,a vector autoregressive(VAR)model is constructed to describe the experience of the three and to find out the main reasons for the long-term current account surplus in China.The results of this paper show that:(1)RMB real effective exchange rate has a weak negative correlation with China's current account balance;(2)China's population age structure has a significant correlation with China's current account balance;(3)In the long run,the change of population age structure is the main reason for the current account balance,and the impact of actual effective exchange rate on the current account balance is weaker.Therefore,we can't attribute our long-term current account surplus to a serious undervaluation of the RMB,not to persecute the appreciation of the RMB blindly.
Keywords/Search Tags:real effective exchange rate, population age structure, current account balance, vector autoregressive model
PDF Full Text Request
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