Analysis of the Real Exchange Rate of Vietnamese Dong from the Perspective of Demographic Dividend

Abstract

With the advantage of demographic dividend and extensive investment value, Vietnam's foreign trade has developed rapidly and made great contribution to its economic development. By studying the mechanism of the indirect effect of the population age structure on the promoting effect of economic development on the real exchange rate of the Vietnamese dong, it is of great significance to understand the long-term change law of the exchange rate of Vietnam and even other developing countries. In this paper, the influence of population age structure on the real exchange rate of VND(Vietnamese dong) against USD(US dollar) was studied. In accordance with the idea of "relevant theoretical analysis - empirical analysis - conclusions and suggestions", the unit root test, analysis of variance and other econometric methods were used for empirical test. It is found that there is a long-term equilibrium relationship between the population age structure and the real exchange rate of VND. It mainly affects the real exchange rate of Vietnam through the mechanism of economic demand, while the influence of "Balassa-Samuelson" on the supply side is weak. In the process of boosting economic growth, the age structure of the population leads to the depreciation tendency of the dong exchange rate. Based on the conclusions of this paper, relevant suggestions are put forward for Vietnam and other countries enjoying demographic dividend to improve the exchange rate formation mechanism, tap the second demographic dividend and develop demographic quality dividend.