TITLE:
Exchange Market Pressure in China: A Re-Examination Based on Girton-Roper Monetary Model
AUTHORS:
Xiangsheng Dou
KEYWORDS:
Exchange Market Pressure, Exchange Rate, Foreign Exchange Reserves
JOURNAL NAME:
Theoretical Economics Letters,
Vol.7 No.5,
August
2,
2017
ABSTRACT: For China’s inefficient foreign exchange market, as
the foreign exchange market is difficult to clear in time, so the foreign
exchange market pressure always exists. Therefore, the in-depth study and
discussion of China’s foreign exchange market pressure issue has important
practical significance. This paper applies Lance Girton and Don Roper’s
monetary model of exchange market pressure to China’s experience. The purpose
of this paper is mainly to test whether the excess supply of money in China can
be absorbed by some combination of the change in exchange rate and the change
in foreign reserves. The results of empirical analysis indicate that the basic
theoretical proposition is accordant with the practice.