The Mechanism of Stability and Dynamic Process of RMB Exchange Rate (Ⅱ)--Empirical Analysis
人民币汇率的稳定机制及其动态过程(Ⅱ)--实证分析

Based on integration and Johansen Juselius cointegration test findings, this paper constructs an error correction model(ECM), which describes non linear adjustment process of renminbi(RMB) against the U.S dollar bilateral exchange rate to long term equilibrium under new exchange rate arrangement in China. The empirical analysis results suggest that all parameters estimated are of the expected sign, and that the single long run relationship exists estimated are of the expected sign, and that the single long run relationship exits among RMB against US$ exchange rate, foreign exchange reserves, and changes in international foreign exchange markets, e.g., Japanese Yen against the U.S.dollar bilateral exchange rate. The ECM model shows that non linear dynamic adjustment process of RMB against the U.S. dollar exchange rate maintains stable and significant relationships to foreign exchange reserves, imports, and Japanese Yen against the U.S. dollar bilateral exchange rate.