The Empirical Analysis Of Exchange Rate Fluctuation On Import-export Of Jiang Su Province

With the development of global economic integration, the exchange rate is playing an important role in the configuration of resources in the world. The exchange rate is the most important summary indicator of international activities, playing a role of price conversion in international finance and international trade activities. As an integral part of the balance of payments, foreign trade occupies an important position in the country’s economy and plays an important role in the rapid development of Chinese economy. It reflects our country’s position in the international division of labor and the degree of integration of the development of Chinese economy with global, while many countries adjusting the exchange rate to balance of international payments.On21st July2005, the People’s Bank of China announces that:from21st July2005, China will reform the exchange rate regime by moving into a managed floating exchange rate base on market supply and demand with reference to a basket of currencies. RMB will no longer be pegged to the US dollar and the RMB exchange rate regime will be improved with greater flexibility, while RMB was floating upward2%. Since the exchange rate reform, with the RMB continued appreciation, the scale of import and export of JiangSu Province’s electromechanical products increasing significantly. This comes out the following questions:What is influence of RMB exchange rate change on the import and export of JiangSu Province’s electromechanical products? Is exchange rate the main factor of the import and export of JiangSu Province’s electromechanical products?In this paper, measurement model is established with the import and export of JiangSu Province’s electromechanical products and the real effective exchange rate, Conducting co-integration analysis during the date of the year2005-2,009. There is long-term co-integration relationship among the import and export of electromechanical products,the real effective exchange rate and the price index of trade commodity. Finally, the econometric model of the explanatory variables and the explanatory variables were carried out Granger causality test, there are following conclusions:First, the import of JiangSu Province’s electromechanical products on the exchange rate changes in elasticity is-1.310917. Second, the export of JiangSu Province’s electromechanical products on the exchange rate changes in elasticity is-3.494271. Third, there is not exist co-integration relationship among the import and export of electromechanical products,the real effective exchange rate and the price index of trade commodity.Fourth, RMB real effective exchange rate changes f did not immediately reflected in the current import and export because of the existence of lagged effects. Current real effective exchange rate and import and export volume does not exist in the long-term co-integration relationship with the way of co-integration analysis. RMB real effective exchange rate changes on imports affect approximately1month, while on exports affect approximately4months or so. Fifth, there is no granger causes relationship between the real effective exchange rate and the price index of traded commodity. The price index of traded commodity is the imports and exports granger cause. The imports is the real effective exchange rate granger causes, but there is incorrect on the contrary. The real effective exchange rate is exports granger causes, exports is the real effective exchange rate granger causes too.The paper is divided into five parts:The first part is the introduction. The second part is literature review. Reviewed the impact of exchange rate changes on import and export that the main theories and related literatures at home and abroad. The third part describes the status of import and export trade. The fourth part is the empirical part of the article. The fifth part is the conclusions and recommendations of the paper, further proposed the policy recommendations that meet the actual situation in JiangSu province, which is based on the previous studies.