RMB Real Effective Exchange Rate Affects the Economic Growth of China: Based on Building Open Ramsey Model of Foreign Debt's Flow Control

Abstract

In order to research the effects of the real exchange on economic growth thoroughly, we should intensively study the decision process of microeconomic body, and pay close attention to the household resident's choice on consumption path as well as manufacturer's selective investment. This paper regards the real effective exchange rate as an important variate of affecting nation's net foreign debt, and which is introduced in open Ramsey model, based on building open Ramsey model of net foreign debt's flow regulation without full opening condition. It also discusses the equilibrium growth path of economy, and analyses the effect direction and mechanism of change in real exchange rate on equilibrium growth path and economic growth with numerical simulation technique.