Rmb Exchange Rate Changes On Price Levels In China

Exchange rate and prices is of concern in economic life of the two economic variables.As China's growing economic integration with the world economy,the exchange rate as the price of the currency,increasing our daily lives and is closely related to exchange rate movements at the same time the health of the economy will have a significant impact on operation,which affects the cross-border business investment decisions,also affect the operation of financial institutions in decision-making.With the credit economy and symbols of the continuous development of the economy,with world economic and financial globalization and China's socialist market economic system,as well as the continuous improvement of the exchange rate market to speed up the reform process,the exchange rate impact on the economy growing,has become macroeconomic situation reflects an important economic indicator.The world has been frequent use of macro-control lever to the exchange rate,exchange rate policy has become a currency for central banks control, and then the main paragraph Tiaojing is to play the role of Vietnam.Therefore,the correct use of exchange rate policy should control function,an accurate analysis of exchange rate impact on the national economy,especially for the price level is even more significant impact on the theoretical and practical value.In this paper,based on the existing literature on the nominal effective exchange rate and price level of the correlation between the empirical analysis,the use of the years 2001 -2007 monthly data on nominal effective exchange rate,and the price level of China's economic measures test,with a view to seeking the variables the correlation between.Through empirical testing,the RMB exchange rate movements on domestic prices have different transmission effects.The short-term price fluctuations in the exchange rate will cause the corresponding changes in the level; the long run,RMB nominal effective exchange rate and domestic prices,foreign prices,domestic money supply is cointegration,the RMB's nominal effective exchange rate changes significantly affected the domestic price level.RMB exchange rate movements on domestic prices from the pass-through with short-term fluctuations in the adjustment to the long-run equilibrium dynamics of self-correcting mechanism.Finally,empirical results in this paper based on the reform of China's exchange rate system and exchange rate adjustments proposed by the relevant policy recommendations.