The Empirical Research Of Equilibium Exchange Rate Of RMB And Policy Choice

RMB Exchange rate had aroused the attention of international society since Japan put forward the opinion about RMB exchange rate appreciation in 2003 . Academe began to doubt the solid principle of RMB exchange rate.A great deal of hot money bring about the false boom of economy in China, which increase the oppression of RMB exchange rate appreciation .And that the new record of increasing speed of CPI seem to support the point of decreasing the oppression of high price according to RMB exchange rate appreciation.Due to the subprime mortgage crisis of American ,the fall of Dollar index make RMB exchange rate point to 7 point . China is facing liquidity superfluous problems now and RMB exchange rate must meet the new challenge. It is a difficult task to compute RMB equilibrium exchange rate in the unceasing change of international financial environment.Having compared and analyzed western equilibrium exchange rate theories, the paper bases on BEER's developed country models ,chooses Elbadawi's developing country models as theoretic guidance, and selects basic economic factors related to RMB equilibrium exchange rate, uses modern econometric tools and methods such as Johansen maximum likelihood, VEC model, H-Pfilter to construct RMB equilibrium exchange rate model, and compute RMB equilibrium exchange rate of 1980-2007. The variables in the model include relative labor productive rate, terms of trade,openness,inflation rate and short term external debt ratio.The computation shows that RMB exchange rate was overestimated 3 times and underestimated 3 times since 1980s. Relative labor productive rate, terms of trade,openness ,inflation rate and short term external debt ratio—the important weigh index of hot money has an influence on the RMB exchange rate.The fact that finance crisis frequently arised all over the world in 1990s indicated the afflux and reversion of short term capital resulted in finance crisis.At present , it is urgent to properly deal with the relation of exchange rate system reform and hot money concussion because the expect of RMB exchange rate appreciation and the concussion of hot money to RMB itself and the economy of China.We must keep away finance risk and protect finance safety .On the one hand ,we should establish the perfect finance system ,strengthen finance interdance and set up the predictability mechanism of capital flow,especially control the short-term venture capital flow and strengthen the management of short term external debt.On the other hand ,we should boost the reform of RMB exchange rate system and establish a new and open economy structure system which can both serve the demand of foreign trade and effectively adjust the mass and manifold foreign capital.Only by this way can we keep away finance risk..