Study On The Moderate Scale And Co-integration Of Our Country's Foreign Exchange Reserves

After experiencing a rapid growth, our country's economy successfully achieved a soft landing in 1997, the growth rate of foreign exchange reserves has been gradually decreased, too. However, in 2001, rebounding in the growth rate of foreign exchange reserves happened, the rate (slope) was more than 30%, with accelerated trend. By the end of February 2006, China's foreign exchange reserves amount to 853．7 billion USD, for the first time exceeded that of Japan, ranked first in the world. In June 2006, foreign exchange reserves reached 941．115 billion USD. As far as the moderate scale is concerned, different professions had different opinions. Today, the international market is so sensitive that only proper reserve is much more help to the development and stability of our economy. So, doing an exact analysis of the foreign exchange reserve and developing a model that can give an exact valuation to the scale of foreign reserve are very important. In a word, a careful study on this topic has significance in theoretical and application.In the second chapter, this paper introduces the basic theory of moderate scale on foreign exchange, and explain the proper standard of moderate that suit to our country. In the third chapter, on the basis of review over history, we analyzed the contemporary situation of our country's reserve. Before the empirical analysis, this paper demonstrates the advantage of Co-integration theory in the study of financial time Series and the primary principle of Co-integration.In the fifth chapter, this paper firstly analyze the qualitative factors that affect the scale of foreign exchange reserve from macro-respect, and then have a co-integration analysis with the help of maximum likelihood estimate method and Grange causality examination method. After doing the regression on every single factor that affect foreign exchange reserve and foreign exchange reserve , I have a unit root test on the reside of the regression and Grange causality examination. Then do a overall regression between the foreign exchange reserve and factors that own the character of co-integration and Grange causality, and do a unit root test on the reside, so I arrive at a equation that have high standard .In the end, this paper propose some constructive opinions for reference to the related departments of foreign exchange reserve management from five respects foreign debit quality, foreign investment, economy progress, predict of risk and strong money.