Thuyết trình ESTIMATING RENMIBI (RMB) EQUILIBRIUM EXCHANGE RATE

Teacher: Dr. Trn Ngc Thơ Group 6: Phm Th Ngc Yn (L) Lê Thanh Nam Nguy!n Xuân Thùy Từ Th Thùy Trang HCM city, Friday, August 15 th ,2014 [...]... diagnostics 14 15 7 DISCUSSION 7.1 Chinese exchange rate policy controversy 7.1 Chinese exchange rate policy controversy from Chinese and American perspectives from Chinese and American perspectives 7.2 Sequencing capital account liberalization 7.2 Sequencing capital account liberalization and adopting floating exchange rate regime and adopting floating exchange rate regime 7.3 Recent policies for capital... large, persistent deviations of the real effective RMB/USD exchange rate from its long-run equilibrium value 2)There is no justification for a deliberate exchange rate revaluation that under 20 CONCLUSIONS 1) There has been little RMB misalignment during the last 25 years 2) Two variables may have profound impact on the future value of RMB: Foreign exchange reserve and increase in the national income in... empirical results 7.1 Chinese exchange rate policy controversy Chinese exchange rate policy CHINESE 1) Allow greater flexibility to a market-based monetary and credit policy? 2) Destabilizing effect on the country’s financial system without well-developed forward, spot, and swap currency markets? AMERICAN 1)Would China adopting a more flexible, less intrusive exchange rate policy ? 2)Socio-political... forward markets is a prerequisite for adopting a more flexible exchange rate regime 2) A well-developed currency market is needed to hedge against foreign currency exposure 19 7.4 Policy implications of the empirical results Fact Result : (Increasing GDP, increasing foreign reserve, and decreasing supply of money from RMB’s real effective exchange rate, …) Considerable pressure for RMB to revalue ? 1)The... forces against the United States’ pressure for China to sharply revalue the currency 17 7.2 Sequencing capital account liberalization and adopting floating exchange rate regime Sequencing of capital account liberalization and more flexible exchange rate policies 1) Which one can do first? 2) Effect of the way which one can be do? 3) The way of China selected and executed…in fact 18 7.3 Recent policies...6.1 Unit root test ADF test Intercept – trend Intercept – no trend No intercept – trend RESULTS OF THE TEST The variables of the real effective exchange rate (REER), money supply (mon), the foreign exchange reserve (res), the terms of trade (tot), the internal price ratio (tnt) Respectively Stationary in first difference 11 6.2 Johansen cointegration method Có 1 đồng liên . between the estimated exchange rate by the FEER method and the actual, observed exchange rate. Behavioral equilibrium exchange rate of RMB REER : The RMB real effective exchange rate REER : The. RECENT EXCHANGE RATE POLICIES 3. LITERATURE REVIEW BEER FEER PEER ERER 4. THE EQUILIBRIUM EXCHANGE RATE  The FEER is both a definition for the real exchange rate and also a method of estimating. capital and labor markets. => The behavioral equilibrium exchange rate, the BEER approach, does not estimate the real equilibrium exchange rate per series, but it attempts to estimate the