The Empirical Study On The Effect Of China Monetary Policy On Foreign Trade

Since the reform and opening, monetary policy has played a more and more important role in our country's economic development. Together with other policies, such as exchange rate policy and foreign capital management policy, monetary policy not only affects the output and economic development but also influences the foreign trade, import and export. The research on the relationship between monetary policy and foreign trade would be a great help for relative departments to make right decisions and policies.This paper does certain research on the relationship between monetary policy and foreign trade. First, it generalizes relative theories of western economies, then on the basis of the practice of China's monetary policy and the development of China's import and export, this paper analyses the true condition of China's economy, abstracts the hypothetical propositions, figures out mathematical models, does empirical analysis and comes to the conclusion that the money supply (M₁) elasticity of import and the money supply (M₁) elasticity of export are both weak.