An Estimation of the Equilibrium Exchange Rate of Reminbi: Based on Enhanced Purchasing Power Parity

摘要

This paper estimates the equilibrium exchange rate of RMB with the enhanced purchasing power parity by choosing 34 economies for the period 1994 to 2008 and the results are as follows: (1) the relative per capita income, openness, cost of carry have important effects on real interest rates, but investment, foreign investment and government expenditure do not have; (2) In 1994 RBM was substantially overestimated, and with the development of economy and the stability of exchange rate, RBM changed to be underestimated in 1996. Then RBM had been in the state of circulation between overestimation and underestimation. Time came to the year of 2008 when financial crisis broken out all over the world, RBM has been underestimated again.