Study On The Influence Of REER On Optimization Of The Trade Structure Of Jiangsu Province

Exchange Rate plays important role in international trade. As a key component, connecting the domestic price and international price, its volatility will influence the development of foreign trade. In fact, it is the real efficient exchange rate (REER) that can be regarded as a measurement of trade goods competence in international market. Because of considering not only the fluctuation of the bilateral-nominal exchange rate, but also the impact of inflation on itself, it can reflect the purchasing power and value of domestic currency better.Economic development of Jiangsu province depends on international trade dramatically. Thereby, based on relative trade theories and econometric models, this paper confines itself to studying the impact of RMB's REER volatility on optimization of trade structure in Jiangsu province from the aspects of commodity and methods of conducting trade.Firstly, The dissertation uses the elasticity theory to display how the REER volatility influence the change of goods structure and classify the commodity into nine categories according to SITC, then, based on the econometric models, analysis the different reaction of the every kind of goods to RMB'REER volatility. After that, conclusion has been made that appreciation of RMB will contribute to the adjusting the goods structure.Following that, this dissertation further discusses the influence of the fluctuation of RMB'REER on the structure of methods of conducting trade. Then, points out that the fluctuation has exerted some positive effects on change of trade methods.Finally, it concludes that in a long run, on condition that there is no serious restriction on capital and technology factor, the inflation of RMB'REER has positive function on adjustment and optimization of trade structure. Besides, advisements and suggestions also been raised.