Emprical Analysis Between Real Effective Exchange Rate Of RMB And Economic Growth

July 21,2005, People's Banks issued announcement:"Today , our country to start to implement take the market supply and demand as the foundation,refers to a basket currency to carry on the mediation , has the management the floating exchange rate system, At the same time,the RMB& US dollar exchange rate 2%."This is a milestone in the development of exchange rate system.。From then on, economy has been developing at a high speed.Is there a cause-effect relationship between real effective exchange rate of RMB and economic growth?This paper did empirical research to this topic.In recent years,RMB have been facing the pressure that has appreciated all the time , the main inducement of this kind of pressure is devalution of U.S.dollar and Sino-America trade deficit,In this case ,international hot money and idle fund into our country in a large amount,gamble the appreciation expectancy of RMB ,become of our country foreign exchange reserve with foreign currency account for main reason that fund rise fast in recent years,Meanwhile ,having brought out or aggravated the price of real eatate of our country and risen violently all the way ,some inflation ,the currency devalues inwards,In this case ,no matter RMB appreciate and maintain the present exchange rate to the outside will bring some profound level changing and fluctuation difficult to controls to economy of our country.This paper studies the relationship between and economic growth by employing the approaches of cointegration theory.And then estabalishes error correction model to look for the short-term dynamic change and long-term equilibrium.Next this paper uses Granger causality test to explore causality relationship between them,in the end uses impulse response function and variance decomposition analysis to examine the degree of influence between them and give suggestion for appreciation of RMB.