Research on the Decision Mechanism of RMB Exchange Rate
|Keywords||RMB exchange rate exchange rate determination VAR model VECmodel|
With the development of China’s economy and the increasing level of opening up, especially China’s current and capital account kept a huge surplus in recent years, the RMB exchange rate issue has become the focus of attention. In July21,2005, RMB exchange rate mechanism reform, it abandoned to peg to US dollar and chose to peg to a basket of currencies, RMB appreciated against US dollar. By the end of2012December, RMB has appreciated against US dollar by22.37%. But the West still frequently put pressure on China through the RMB exchange rate issue, calling for faster RMB appreciation.So whether the countries such as the US and Europe criticizes for the RMB is reasonable? Whether the exchange rate of RMB has been artificially undervalued? How the current RMB exchange rate is to decide? What are the factors that determine the formation of the RMB exchange rate? What is the effect of each factor on the RMB exchange rate? How much is contribution? Whether the RMB exchange rate will continue to rise? This paper will try to construct a decision mechanism model of RMB exchange rate to answer the above questions.Based on the review of the RMB exchange rate system process of reform and development, and the classical Western exchange rate decision theory, combined with the actual situation of China’s economic development, especially the various influence factors of RMB exchange rate decision, we expand the existing exchange rate decision theory and form the decision mechanism model of RMB exchange rate exchange rate. Construction of VAR model and VEC model with different periods of the RMB exchange rate data, by using the impulse response, variance decomposition and co-integration analysis to analyze various factors’affect on the RMB exchange rate, and then verify the applicability of the RMB exchange rate determination model.The results show:the net export and inflation rate as factors affecting a country’s exchange rate decision is suitable to the actual situation of the RMB exchange rate decision; The RMB exchange rate decision mechanism model is unsuitable to the RMB exchange rate against US dollar, but suitable to the RMB exchange rate decision mechanism after2005. The factors of RMB exchange rate formation are very significant, most of the variables are consistent with the predictions of RMB exchange rate decision mechanism models. Western countries criticize the undervaluation of the RMB exchange rate is the lack of objective evidence. But the current RMB exchange rate formation mechanism is still not very mature, at present China has a lot of policy, regulations that influence the formation mechanism of RMB exchange rate that influence market reform direction of the RMB exchange rate formation system. With the process of the reform of RMB exchange rate moves forward and the rising of market of RMB exchange rate, the RMB exchange rate formation mechanism model will be better able to explain the formation and volatility of the RMB exchange rate.