The Study on Measuring RMB Behavioral Equilibrium Exchange Rate and Misalignment:1978-2006

In the light of the theory of behavioral equilibrium exchange rate,this paper uses different econometric methodology.to estimates the behavioral equilibrium exchange rate and to calculate the misalignments of nominal RMB and real RMB during the period of 1978～2006.The results indicate that in terms of the nominal exchange rater,,RMB was overvalued before1995 and undervalued between1996-2005,to the highest point in 2000 and then slopes down yearly to hit 4.7% in 2005.However,in 20006 the nominal exchange rate of RMB was overestimated about 0.9% due to the impact of the exchange rate reform of RMB in 2005.The results also indicate that the real exchange rate of RMB was overestimated before 1993,but after 1994,the export of China increased rapidly while the value of US dollars continued to decline.Against this backdrop,the real exchange rate of RMB was undervalued about 16.3% in 2005,with the same cause of exchange rate reform,the situation of undervaluation came down somewhat in 2006.