A Theoretical and Empirical Analysis of the RMB Exchange Rate Paradox under the Exchange Rate Price Transmission Mechanism
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Abstract Based on the traditional exchange rate price transmission theory and the facts in China, this article tries to explore the conduction mechanism of RMB’s domestic appreciation and international depreciation, and analyze the conduction path of RMB exchange rate paradox by the VAR model as well. According to the model, the conduction path exists: exchange rate appreciation increases the amount of foreign exchange reserves, which further results in a higher money supply, and the enhanced money supply finally booms the price level. In the end, this article provides some policy suggestions regarding the paradox.
DAO Shi-Gui,SUN Yu. A Theoretical and Empirical Analysis of the RMB Exchange Rate Paradox under the Exchange Rate Price Transmission Mechanism. Economic Survey, 2014, 31(6): 0154.
2014, Vol. 31 
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