| As an important energy and resource, petrol is widely used in the world. For the past several years, the increasing price of petrol has influenced world economy. With the rapid development of demand for petrol, Chinese economy has been profoundly impacted. And the issues about exchange rate are the hottest ones in macro economy, especially the effects from the change of real effective exchange rate of RMB. So, the research of the relationship between price of petrol and real effective exchange rate of RMB is rather significant.After introducing the related concepts and theories, the paper uses cointegration to analyze the influence of change from price of petrol and real effective exchange rate of RMB. According to macro economy theory, from the long term, real exchange rate influences real output by import and export, and real interest rate influences real output by investment. Accordingly, the paper uses real exchange rate, real interest rate and real output as endogenous variable. For China, the international price of petrol is exogenous variable. The conclusion is that from the Granger test, real exchange rate, real interest rate and price of petrol are the Granger cause of real GDP. The coefficient signs of real exchange rate and real interest rate are the same as the expectation. From the long term, the 1% depreciation of real exchange rate induces the real GDP to increase by 2.27%, which means that the system of exchange rate has markedly influenced Chinese economy. However, the 1% decrease in real interest rate causes real GDP to increase 0.392%, smaller than the system of exchange rate. From VECM test, the short-term 1% change of the price of petrol decreases real output by 0.08 %, which means that Chinese overdependence of petrol brings about more shocks to economy. In summary, to reduce the impact, the paper offers some policy to solve the problem. |
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