The Equilibrium Exchange Rate Of RMB And Misalignment Analysis

With the continuous development of China’s open economy, the world economicties have become closer, the level of China’s exchange rate and policy Attract academicand politicalne’s attention. There are many questions of China’s exchange rate, forexample，the RMB exchange rate is undervalued or overestimate? Current exchangerate meets the equilibrium exchange rate? Exchange rate have been manipulated?Econometric studies suggest that long-term exchange rate imbalances will cause seriousimpact on China’s economic development regardless of a country’s exchange rate isovervalued or undervalued.So,It is important to judge the level of the RMB exchangerate, Academia commonly used RMB equilibrium exchange rate as criterion. Bycomparing and analyzing the real exchange rate and equilibrium exchange rate,we cannot only determine the current level of China’s exchange rate, but also providedevelopment direction of China’s exchange rate.Guided by RMB Equilibrium Exchange Rate, the content of this paper is as follows:(1) Basic definition of the exchange rate is described, equilibrium exchange rate modelis detailed introduced both at home and abroad, the different assumptions and sopes ofthe model are comparatived analysis.(2) Considering the comparative advantage of BEER model on the calculating ofEquilibrium Exchange Rate，the paper Selection BEER model as the basic idea of RMBEquilibrium Exchange Rate.In the study of BEER model, most of the scholarsSubjectivly select the explanatory variables on a priori theory.In order to avoid theshortage of subjectivity select explanatory variables, we use Hsiao program to selectthem.(3) This paper selecte unit root test, cointegration, error correction to analyzebasic variables.By using co-integration, error correction and other econometricmethods,we can analyze the effect of the RMB exchange rate on short-term andlong-term.finally, this paper estimate the RMB Equilibrium Exchange Rate andmeasure misalignment from the first quarter of1994to the fourth quarter of2012withthe HP filtering techniques.(4) The empirical results show that: the RMB exchange rate was underestimated from1994to1996and2009to the second quarter of2011, while RMB was continuedover-estimated from1997to2005,2008to2009and the second quarter of2011to 2012,the real effective exchange rate is almost close to the equilibrium level from2006to2008.(5)This paper analyze the reasons of the RMB exchange rate misalignment and theimpact of misalignment,on this basis, this paper puts forward relevant policySuggestions.