A Theoretical And Empirical Analysis Of The Two-way Mechanism Of RMB Exchange Rate And Capital Flow

The importance of exchange rate in international economic exchanges has become economic common sense.In the international financial market,speculators use the exchange rate to carry out various arbitrage activities,which causes the frequent flow of capital between countries.The large-scale inflow of international capital can bring huge economic benefits to the country of inflow,and the large-scale outflow of international capital can have a huge economic impact.With the promotion of China's exchange rate reform and the opening of capital account,the fluctuation of RMB exchange rate and international capital flows has gradually expanded,and the research on these two issues has also been put on the agenda.On the basis of sorting out the existing researches,this article comprehensively and systematically analyses the relationship among the RMB exchange rate,capital inflow,and capital outflow.First,it theoretically analyses the mechanism of the exchange rate of RMB and capital flow.Then on the basis of scholars' calculations,this dissertation find its way to measure four variables of capital outflow,capital inflow,foreign exchange control,and exchange rate expectation.Finally,using the impulse response analysis and variance decomposition analysis of the VAR model,the study finds that the exchange rate and exchange rate expectations all affect capital inflows and capital outflows,but the effect of exchange rate expectations is smaller;both capital outflows and capital inflows affect the exchange rate,and the effect of capital outflows is greater;capital outflows have less impact on capital inflows,and capital inflows have a greater impact on capital outflows.In addition,China's exchange rate and capital flow have strong autonomy.At last,this paper puts forward some Suggestions on strengthening exchange rate statistics,guiding exchange rate expectations and balancing international capital supervision and tolerance in terms of exchange rate reform and capital flow management.