2007•Unpublished venueRequires access

A Study on RMB Equilibrium Real Exchange Rate：1980—2005

Huang Ji-sheng, Shen Lin

Abstract

This paper employs the BEER model, taking the data from 1980-2005, to estimate RMB equilibrium real exchange rate and real exchange rate misalignment. In the period of 1980-1985, RMB real exchange rate is overvalued because of the high RMB nominal exchange rate; in the period of 1986-1995, RMB real exchange rate is undervalued because of the successive depreciation of RMB nominal exchange rate. The range of undervaluation has been reduced since the exchange rate regime reform in 1994. In the period of 1996-2003, RMB real exchange rate is overvalued. Since 2004, RMB real exchange rate has been a little undervalued. Currently we should regulate RMB real exchange rate to make it return to an equilibrium level.

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Key concepts: Renminbi, Exchange rate, Depreciation (economics), Economics, Monetary economics, Microeconomics, Profit (economics), Financial capital