Research On The Economic Effect Of RMB Internationalization

The internationalization of the renminbi is the general trend.This paper studies the effects of RMB internationalization on China's macro economy from both theoretical and empirical perspectives.The theoretical analysis mainly uses the existing economics and finance theories to conduct qualitative research on this issue.The specific method is to construct a basic model covering the required variables under the theoretical framework of the new open macroeconomics,and analyze the relevant variables.The quantitative relationship between the two countries derives the economic effects of the internationalization level of a country's currency in the short and long term,respectively.The results of theoretical analysis provide direction for further research,and are subject to various premise assumptions.The theoretical model cannot fully meet the research needs in terms of explanatory ability.Therefore,based on the theoretical analysis,this paper uses time series analysis technology to establish a vector error correction model(VECM)for related variables.Through the analysis of the model,the impact of RMB internationalization on China's macro economy is quantitatively studied from the empirical perspective.In general,opportunities and challenges coexist in the process of RMB internationalization,and there are still many uncertainties in the future.Specifically,RMB internationalization has a large short-term impact on China's GDP,while a small long-term impact.Although the output level will increase within a certain period,the output level fluctuates greatly in the short term,which is not conducive to stable economic development.Compared to China's gross domestic product,consumer spending in China is affected by RMB internationalization is larger,RMB internationalization level,increased purchasing power of currency in the world in our country,residents' consumption level increases,it is helpful to improve the quality of living improve people's well-being,but also may expand the trade deficit,is not conducive to maintain the balance of payments;For RMB nominal exchange rate,RMB internationalization can cause larger changes in the exchange rate of our country,the influence of the one hand,RMB internationalization in the short term,China's exchange rate causes large fluctuations,increase the risk of money market,on the other hand,the RMB on the international money market in short supply,lead to the appreciation of the renminbi,although it helps to expand outward investment,but not conducive to domestic manufacturers export goods,thus reduce employment,hinder economic growth;The influence of RMB internationalization on China's terms of trade is the highest among all economic variables and remains at this level in the long run.In the long run,RMB internationalization will worsen China's terms of trade,which is mainly caused by RMB appreciation brought by RMB internationalization.The deterioration of terms of trade will not be conducive to China's industrial upgrading and transformation.In conclusion,the Chinese government should formulate reasonable policies to not only make full use of the benefits brought by RMB internationalization to China's economic development,but also guard against the risks and costs that RMB internationalization may bring.