| Abstract | In the process of globalization, the energy issue is always the focus of national political and economic concerns. Existing studies pay more attention to the relationship between energy prices and the real exchange rate, while ignoring the effect of a country's energy endowment itself on the real exchange rate. By constructing a two-country and three-section model with energy endowment in open economy, this paper explains the mechanism of how energy endowments affect the real exchange rate. In the empirical tests, the annual data of 1991-2011 period on 68 countries are used to conduct the panel regression analysis. The results show that energy endowment indeed has a significant impact on the real exchange rate. The more abundant one country’s energy endowment is, the higher the real exchange rate of its currency is; otherwise, the lower. In addition, we verify the Balassa-Samuelson effect hypothesis. Recently, the energy dependence on imports is growing more and more heavily in China, so the RMB should depreciate appropriately. |