Comparative Analysis Of The Effect Of The Real Effective Exchange Rate On Trade Before And After The Reform Of Exchange Rate

Before the reform of the exchange rate, the real effective exchange rate is in its downtrend. And after the reform, till the end of 2008, RMB rises more than 20%. The effect of the exchange rate to the trade attracts the scholars from aboard and domestic to discuss. Therefore, the theme of this thesis is to examine whether the exchange rate affect the trade or not. This thesis uses the datum from Jan.2002 to Jun.2008 to analyze the effect. It separates the era into to two parts and uses Bounds testing method to analyze. It concludes that, before and after the reform,1.Exchange rate affects the export very much, and the direction is different; before the reform, exchange rate affects the obviously but not after the reform; 2.The fluctuation of the exchange rate has different effect on the way of trade and it affects the general way more obviously; 3.There is no difference of the effect of the exchange rate on the structure of the goods before and after the reform; 4.From the multi-periods regression model,VAR model and ARDL-ECM model, this thesis concludes that it appears "anti-J curve effect" after the reform, but the conclusion is different from each other from the three models before the reform. Generally, this thesis finds that the fluctuation of the exchange rate of RMB affects the trade of China obviously and gives some suggestions in the end.