Monetarist Exchange Rate Determination Model, Empirical Analysis

After China'exchange regime reform, there are some arguments about the current exchange rate formation system, and some improvement should be carried on. Here we use historic data to do long term research. On the basis of reviewing the RMB exchange rate history, according to the flexible-price monetary model, we use the cointegration method to do some empirical research, try to propose some suggestions for RMB formation. Also through the comparative analysis between the nominal exchange rate and the exchange rate get from the flexible-price monetary model, we give some suggestion for the future trend of RMB exchange rate.