Using fuzzy neural networks for RMB/USD real exchange rate forecasting

In order to aim at improving the forecasting performance of the RMB/USD exchange rate, this paper proposes a new architecture of fuzzy neural networks based on fuzzy logic, and the method of point differential, which guarantees not only the direction of weight correction, but also the needed precision for the BP algorithm. In applying genetic algorithms for optimal performance, this approach, in the forecasting of the RMB/USD real exchange rate from 1994 to 2000, obviously outperforms typical BP Neural Networks and exhibits a higher capacity in regard to nonlinear, time-variablility, and illegibility of the exchange rate.

Demographic Structure and the Real Exchange Rate:A Study Based on Cross-Country Data

By creating a two-sector intertemporal and intergenerational small open economy model,this paper investigates how real exchange rate responds to demographic shifts in the long term.The result shows that when the capital density of tradable goods sector exceeds that of non-tradable goods sector in a country,an increase in the country's elderly dependency rate(ODR) will cause its real exchange rate to appreciate.In addition,higher savings rate or per capita labor income means that real exchange rate is more responsive to ODR variations.We conducted an econometric test on our theoretical hypotheses using the data of 214 countries and regions during 1980-2013.Empirical result indicates that an increase of ODR will cause real exchange rate to appreciate.This result is robust and unaffected by sample grouping characteristics and differences.An increase in savings rate will significantly increase the ODR elasticity of real exchange rate.This conclusion is also significant and robust for overall samples and categorized samples(except for developed countries) and generally consistent with our theoretical hypothesis.However,our empirical research generally does not support the hypothesis that higher labor income increases the responsiveness of real exchange rate to ODR.This study is of great significance to unravel the effect of China's ageing population on the longterm variations of renminbi's exchange rate.

Real Exchange Rate in China:A Long-run Perspective

This paper investigates the RMB exchange rate from a long-run viewpoint. Whether China＇s rapid economic growth brought about real exchange rate appreciation between 1975 and 2002 is empirically examined, based on a supply-side model, the Balassa-Semuelson Hypothesis （BSH）. The same test is conducted on Japan, Hong Kong, Korea, Malaysia, Singapore, Thailand, the Philippines, Indonesia and India. Our result indicates that the BSH only exists where the industrial structure has been upgraded and the economy has been successfully transformed from an agricultural economy to a manufacturing economy. Interestingly, China, among those where the BSH does not present, appears to be upgrading its industrial and trade structure. We then try to answer the question of why past rapid growth has no significant relationship with the RMB real exchange rate and what factors are underlying the trend of the RMB real exchange rate. We expect an appreciating trend of RMB real exchange rate in the foreseeable future, presuming that China＇s industrial upgrading process continues and the factors pertaining to the BSH＇s prediction, such as rise of wage rates in both tradables and nontradables, become more significant.

Changing Comparative Advantage, Real Exchange Rate Impact and Sino-Japanese Trade Fluctuations

China, as an important source country in the global value chain, especially in the East Asian production networks, has exerted significant influence on Sino-Japanese trade fluctuations. This paper explores the real factors that lead to the fluctuations in Sino- Japanese trade. Using the Hodrick-Prescott filter technique and OECD-WTO Statistics on Trade in Value Added from 1995 to 2011, the impact of the changing comparative advantage between the two countries is also examined. The empirical results indicate that determinants of the fluctuations in Sino-Japapese trade include changing comparative advantages, the volatility of the real exchange rate and quite a few external shocks. Some policy suggestions are put forward in regards to the stability of trade between the two countries.

The Chaotic Real-Exchange-Rate Growth Model

Chaos theory is used to prove that erratic and chaotic fluctuations can indeed arise in completely deterministic models. Chaos theory reveals structure in aperiodic, dynamic systems. A number of non-linear business cycle models use chaos theory to explain complex motion of the economy. Chaotic systems exhibit a sensitive dependence on initial conditions： Seemingly insignificant changes in the initial conditions produce large differences in outcomes. The basic aim of this analysis is to provide a relatively simple chaotic real-exchange-rate growth model that is capable of generating stable equilibria, cycles, or chaos.

Analysis on the exchange rate of Australian dollar

Australian dollar （AUD） maintains a fluctuant increase for long period, but in recent two years, this currency represents an anomalistic change. In order to forecast the trend of AUD, this essay examines the exchange rate of AUD in then years from March of 2000 to March of 2010, and argues the factors which create these trend changes. By means of secondary research and graphs analysis, the relevant evidence and argument was selected into four terms below： relative raw materials prices changes, relative domestic price level and Import-Expert changes, relative interest rate changes, and other factors. The examples based on the theoretics, graphs, statistics and experts＇ opinions.

Analysis of the Moderator Effect of RMB Exchange-- Rate on Export The Case of Guangdong Province in China

An important limitation of the research literatures which study the effect on the export of the real effective exchange rates is the lack of application of interaction or moderator effect among the independent variables. To remedy this lacuna, the authors developed a model in which real effective exchange rate moderated the effect of import and utilization of foreign capital on export. The sample comprised 11 years＇ data in Guangdong China. The result showed that real effective exchange rate of RMB affected the export by interacting with utilization of foreign capital. Moreover, to some degree, the real effective exchange rate can also act as moderator between import and export.

Capital flows, economic growth and the real effective exchange rate: Evidence from China

This paper examines the Granger causal relationship between capital flows and economic growth in China over the period 1998Q1–2019Q2,allowing for real effective exchange rate(REER)effects.As parameter instability tests indicate structural changes,we use bootstrap rolling window causality tests,which suggest that the causal nexus between capital flows and GDP growth is time-varying.We find that the causal links between foreign direct investments(FDIs)and GDP growth are hardly affected by the REER,whereas the REER plays a more important role in affecting the causal connections between portfolio investments and other investments and GDP growth.Our results suggest that cumulative portfolio inflows and cumulative other investment inflows harm GDP growth,whereas cumulative portfolio outflows and cumula-tive other investment outflows positively affect GDP growth.

Real Effective Exchange Rate and Regional Economic Growth in China： Evidence from Provincial Data

Using data for the period 2000-2011, we construct province-level real effective exchange rate （REER） indices for China and test the effect of REER depreciation on regional economic growth in a generalized method of moments regression framework. Our results show that REER depreciation, in general, promotes regional economic growth, through increasing net exports and lowering FDI costs. After dividing the full sample into coastal and inland subsamples, we find that REER depreciation influences economic growth in inland areas but not in coastal areas. This is due to the fact that the inland areas have more surplus labor or other resources to expand their production capacity when REER depreciation leads to increased worm demand. Furthermore, compared to inland areas, processing-and-assembly trade comprises a larger share of trade in the coastal areas, where traders import more raw materials and intermediate goods to process and assemble goods. When the exchange rate depreciates, the costs of imported materials and immediate goods increase. In this case, the benefits from REER depreciation in coastal areas are offset to some extent and are thus lower than in inland areas.

Industry-specific Real Effective Exchange Rate for China:2000-2009

This paper measures the industry-specific real effective exchange rate （REER） for China by matching domestic and foreign industry-level price and trade data series. We find that after 2005 the REER appreciates more in the ＂chemical, plastics, rubber and fuels industry＂ and the ＂＇machinery and equipment industry,＂ but remains roughly constant or even depreciates in other industries. The nominal exchange rate generally accounts for over 50 percent of the aggregate real effective exchange rate JTuetuations, but this conclusion does not apply to three of nine industries. We apply the industry-specific REER to re-examine the relationship between the exchange rate and trade, and find that the industry-specific REER index performs better than the traditional aggregate REER index. We recommend that the Chinese Government officially adopt industry-specific exchange rates instead of using the aggregate effective exchange rates to evaluate the competitiveness of Chinese industries in the international market.

An Analysis of the Determinants of the Changes in China's Foreign Exchange Reserves' Nominal and Real Rates of Return

We use decomposition and regression to examine the reasons for the changes in nominal and real rates of return of China＇s foreign exchange reserves between 2002 and 2009. The results show that the US financial market risk premium is the most important determinant of changes in the nominal rate of return, while the US dollar exchange rate and the bulk commodity price are the two key determinants of changes in the real rate of return. From empirically based research, one may conclude that the loose monetary policy of the US Federal Reserve increases China＇s foreign exchange reserves＇ nominal rate of return but decreases the real rate of return and that the European debt crisis has an uncertain impact on China＇s foreign exchange reserves＇ nominal rate of return but may well raise the real rate of return.

Is the Purchasing Power Parity Supported by the Data？

This report mainly examines whether the Purchasing Power Parity （PPP） theory is supported by the data. The data used in the report contains the exchange rate of US dollar against New Zealand dollar, Consumer Price Index （CPI） of the US, and Consumer Price Index of New Zealand. The time period of the data is from September 30th, 1914 to March 31st, 2010, the data were collected quarterly. Mathematical regressions and graphs are contained in the research. In this research, the simplified form of the PPP theory is analyzed, and then there is a comparison between the spotted exchange rates and the expected exchange rates. Finally, the observation on long-run PPP is explained. The key conclusion of this research is that, the PPP theory is not supported by the data, however, the long-run PPP does hold.

Testing the Hypothesis of J Curve for Turkish Economy

The purpose of this paper is to find the relationship between balance of foreign trade and real exchange rate in econometrics concept by using time series method. The authors used annual data of foreign trade deficit, real exchange rate, gross domestic product （GDP） of Turkey from 1989 to 2014, and analyzed the long-term relation of them by using ARDL bound testing method. By the result of test method; although there was a long-term relationship between balance of foreign trade, real exchange rate, GDP of Turkey and of the world, the coefficient of real exchange rate was insignificant in terms of statistical methods. Turkey and the world as well as being statistically significant coefficient of GDP, it was concluded that there was significant relationship with the economic aspects.

The Impact of Money Supply on the Economy:A Panel Study on Selected Countries

This study investigates the impact of money supply on economic growth rate,inflation rate,exchange rate and real interest rate.We used a panel of 217 countries from 1960 to 2020 and four different models to address these questions.The empirical results support the quantity theory of money.In addition,the study found evidence for a negative relationship between real interest rate and inflation and between money supply and real interest rate.Finally,our results show that lagged money growth rate is positively correlated with GDP growth rate but money growth rate is negatively correlated with GDP growth rate.

China's Import–exchange Rate Linkage:Evidence from the China-bound Exports of Japan and Korea

This paper examines how the China-bound exports of Japan and Korea are related to exchange rates, motivated by the fact that processing trade makes up a large proportion of China＇s trade, and that Japan and Korea are the leading source countries for processing imports. Because processing imports are inputs for exports, the link between such imports and China＇s exchange rates are ambiguous. We estimate export functions that include China＇s RMB real effective exchauge rates （REER） along with bilateral real exchange rates （B RER） using Johausen ＇s cointegration method aud find that the RMB REER significantly affects Japanese and Korean exports to China, even more so than BRER in most cases examined. These two exchange rates appear in the export equations with opposite signs. Subsequently, we use the estimated model to illustrate the importance of accounting for a concurrent change in B RER when analyzing the effects of a hypothetical RMB revaluation on China＇s trade balances despite the apparently weak imports-B RER linkage.

Exchange Rate Change, Factor Market Distortion and Company Performance

Based on the matched data of China’s tax survey and customs from 2007 to 2011,this paper studies the differential impact of exchange rate changes on the performance of companies by region from the perspective of factor market distortion.The results show that for import companies,the RMB appreciation significantly contributes to improving their performance and this phenomenon is more pronounced in areas with high factor market distortions.Channel tests show that the proportion of intermediate goods imported by final producers increases with regional factor market distortions.Therefore,the appreciation of the national currency is more favorable for areas with high factor market distortions(companies with high proportion of imported intermediate goods).In addition,the appreciation of the national currency will promote the production of China’s upstream intermediate goods producers by expanding the output of downstream enterprises.This paper complements previous studies on the differential impact of RMB exchange rate changes on regional economic growth from a micro perspective.

Can Renminbi Appreciation Reduce the US Trade Deficit?

Using a computational general equilibrium model, we analyze the impacts of Chinese real exchange rate appreciation on the trade balance of China and the USA and on various industries of both countries, We use several scenarios with 2.1, 6 and 12percent real exchange rate appreciations for our simulation analysis. The results indicate that China＇s exchange rate appreciation might not solve the enlarging US current account deficits. Chinese outputs in both primary and manufacture sectors will increase, whereas the outputs of energy and serviees sectorx will be adversely affected. The price of value-added products declines in light of the renminbi appreciation.

An Empirical Analysis of the Foreign Trade Balance in China

The objective of this paper is to investigate the dynamic relationship between China′s trade balance (T) and macroeconomic variables: domestic and foreign output (Y and Y\+* ), real exchange rate (E), domestic and foreign money supply (M and M\+*). The ADF Unit Root results show that the variables are all integrated of order I (1). The trade balance in China is not cointegrated with a number of variables, including the exchange rate. Absorption, elasticity, and monetary models are compared, and the elastic model performs better. There has been J\| curve in China, and the devaluations have had significant effect on the trade balance.

Japan's Bubble,the USA's Bubble and China's Bubble

This paper compares the three recent episodes of boom and bust cycles m asset prices： Japan in the late 1980s to the 1990s; the USA since the mid-1990s; and China during the past decade. Although we have not yet seen a collapse of Chinese property prices, their increases so far are comparable to those in the other two episodes and a careful comparative study is warranted The present paper first examines the behavior of asset prices, of property prices in particular, in the three cases, and highlights some similarities. The paper emphasizes the role played by extremely easy monetary policy in generating bubble-like asset price behavior in the three cases. The reason for easy monetary policies is investigated. In the US case, the monetary authority was concerned about the risk of deflation in the early to mid- 2000s. The experiences of Japan and China are quite similar in that the monetary authorities of both countries were seriously concerned about the possible deflationary effects of exchange rate appreciation on the economy. The implications of such a finding for the future of Chinese macroeconomic policy are discussed