Interest rate marketization is the premise for capital account liberalization and exchange rate regime flexiblization;capital control degree affects interest rate marketization and RMB exchange rate regime flexiblization;interest rate and exchange rate interact with and conduct each other.

A Model of Estimating the Exchange Rate Elasticity and Empirical Analysis to RMB;

The paper aims to understand the extent of RMB real exchange rate misadjustment through an empirical analysis of the influencing factors and at the same time points out the important impacts of exchange rate elasticity in the reform of RMB exchange rate policy and accordingly gives advice on the perfection of exchange rate forming mechanism.

Specifically speaking, the theoretical analysis introduces Dixit-Stiglitz Constant Elasticity of Substitution Utility Function to discuss the factors including both foreign and domestic firms\' traded good prices, demand, market occupancy, marginal cost and exchange rate, which influence the exchange rate pass-through elasticity under the framework of imperfectly competitive market.