Natural Equilibrium Exchange Rate Of RMB

In open economy, the exchange rate policy as an important means of macroeconomic policy plays an important role adjustment the achievement of internal and external balance, but also to maintain the bridge and link between China and other countries of the economy, since July 2005, China has adopted market-based and managed floating exchange rate system, which means that China has formed a more flexible floating exchange rate mechanism. For a managed floating exchange rate system of the country, in order to maintain the exchange rate basically stable, we must fully understand the equilibrium exchange rate movements in order to carry out more effective exchange rate management.This article has carried on the simple introduction to the Western numerous balanced exchange rate models, and learn from the natural equilibrium exchange rate model, by Hsiao model finally selected by the degree of openness, labor productivity, foreign exchange reserves, the broad money supply four basic elements as the main economic explanatory variables, used 1981 to 2009 data, the application cooperates entire examination, Hodrick-Prescott filtering to conduct the research to the RMB balanced exchange rate, has obtained the concrete exchange rate model, and calculated the RMB rate the being out of balance degree, and put forward the reasonable policy-type proposal.The findings discovered:(1) The primary factor affects the RMB rate have the labor productivity (LP), the broad money supply capacity (M2), degree of openness (OPEN), the foreign exchange reserve (FER), M2 is biggest to the actual effective exchange rate's influence, and to the exchange rate the influence is negative, degree of openness to the actual effective exchange rate's influence is also negative, the positive impact on the exchange rate have labor productivity factors (LP), foreign exchange reserves (FER) (2) On section time series analysis to 1994 as the cut-off point, the period of time in front of the money supply is the biggest factor affecting the real exchange rate, but at a later stage time, the openness of the biggest factors affecting the exchange rate, This shows that with time and environment changes, The identical factor's influence is dissimilar. Also reflects the reform and opening up on people's lives are increasingly affected.(3) Through analysis of the rate of the RMB disorders, can learn from the reform and opening up, exchange rate has experienced three times overvalued and three times undervalued, Overvalued level in 1985 which reached a maximum of 15%, the largest undervalued in 1989 close to -17%, Overestimation and underestimation of the next few not so obvious, the past 10 years, the extent of both over or underestimate is not more than 10%, indicating that China's current exchange rate system is reasonable.