The Research On The Appropriate Size And Based On The Ajusted Model Of Agarwal Of Foreign Exchange Reserve In China

Foreign exchange reserve is the core of international currency system , and also the important problem of international financial field. Whether foreign exchange reserve is adequate or not directly concerns financial safety and the international economic credit degree of a country, thus it is also the one of focuses that the academia of our country pays attention to.Since foreign exchange rate regime reformation in 1994 , the foreign exchange reserve of our country has entered a high-speed increasing period. Up to the end of June, 2008, the foreign exchange reserve of our country has reached 1,808,800,000,000 dollars, our country has been the country of the largest foreign exchange reserve in the world. The high volume of the foreign exchange reserve shows the ability of coping with emergencies and balacing the international incomes and expenses , also reducing the international financial risk , which will be helpful to strengthen the macro-control ability of our country; However, excessive reserve will restrain the increase and development of the economy. Therefore , the appropriate size of foreign exchange reserve is vital to the economic safety of a country.Firstly, this paper stands in the basic theory of the moderate scales of foreign exchange reserve reviews and comments the theory of moderate foreign exchange reserve scales. Seccondly, the paper estimates and analyses the adjusted Agarwal model, then puts forward the basic methodology of the appropriate size of foreign exchange reserve in our country .Thirdly, after combining and analyzing the actual condition of the development of the foreign exchange reserve and the reason for the high-speed increase of the foreign exchange reserve in our country recently ,I alter the adjusted Agarwal model , making a new model which is suitable for the appropriate size of foreign exchange reserve in our country . And then I estimate the appropriate size of foreign exchange reserve between 1994 to 2007, make a comparison of the actual scale and the result which has been obtained above, and also Conduct a turth analysis simultaneously .The result shows that the foreign exchange reserve in our country has been being excessive in rencent years .Finally, according to the problem of the excessive scale of foreign exchange reserve , I make the suggestion on clearing the mistakes on the recognization of the excessive scale of foreign exchange reserve and deepening the policy suggestions such as the system reform of exchange control and the perfect management system of the foreign exchange reserve in China .