Rmb Exchange Rate Changes To Cpi Impact Empirical Analysis

RMB exchanging rate is the relationship between internal and external balance of the major current economic problems, this is not a purely economic issue. Especially in the economic and financial globalization and the context of the financial crisis, the RMB exchange rate changes related to trade, finance, livelihood, political and other fields, so it is subjected to the international community's attention. Increasing pressure on the RMB exchange rate, CPI rose sharply, this "double high" phenomenon, the general rules of law of economics. This phenomenon not only affects double high long-term stable development of China's economy, severely affected the daily lives of the people is not conducive to job growth and social stability. Therefore, the urgent need for change in the RMB exchange rate and CPI study the issue and the relationship between the two in-depth analysis to find the correct and effective solution.In this paper, combined with the sluggish economic situation of foreign and domestic inflation, severe cases of the relationship between the RMB exchange rate and the CPI, by studying the previous results, the rationale related to the phase of the guidance of 2008 in China since the RMB exchange rate fluctuations, According to China's exchange rate system at all stages and characteristics of inflation for the current status and characteristics of China, to analyze the cause of the current inflation continued to rise, the main reason remains high. Through studying the literature, the renminbi's nominal exchange rate and the CPI for the impact of the relationship between the empirical analysis. In this paper, in 2008 -10 on the statistical data of RMB nominal exchange rate and CPI for the empirical analysis, and a VAR model for the relationship between two variables, through the impulse response function and variance decomposition further reveals the extent of the impact of exchange rate on CPI .Empirical analysis shows that the nominal effective exchange rate pass-the consumer price index is not complete, the RMB appreciation in the long term impact on the consumer price index was significantly more than in the short term. From the nominal exchange rate in the long-term relationship with the consumer price index showing a significant negative correlation, the nominal effective exchange rate of one percentage point change will lead to changes in the consumer price index 0.244, indicating that the exchange rate is not completely passed. Short term, the nominal effective exchange rate by one percentage point change will lead to changes in the consumer price index of 0.15. Therefore, the impact of the exchange rate can be only a small part of the transfer to the domestic consumer prices. With impulse response and variance decomposition results show that the RMB exchange rate a direct impact on domestic prices is not significant, the nominal effective exchange rate of the transmission effect of the consumer price index is small, but the currency exchange rate and imports of China's total production that could indirectly affect the prices. Finally, the policy and recommendations, indicating that the total amount and structure necessary to properly handle the relationship between inflation and economic growth relationship, better integrated use of open market operations, reserve ratio, interest rates, exchange rates and other price and quantity tools improve the proportion of direct financing, and strengthen support for the real economy. The implementation of prudent monetary policy and stable domestic prices, the central "five-second" work of gravity.