The Study Of RMB Exchange Rate Pass-Through

In the traditional international financial analysis framework, based on the law of one price, the influence of a country’s exchange rate fluctuations on all kinds of price level should be completed, this makes a country can adjust the trade balance through the expenditure conversion effect, and then stabilize the domestic inflation level. But a large number of theory and empirical studies from both at home and abroad have confirmed the existence of incomplete exchange rate pass-through, which makes it harder to adjust the foreign trade position and stabilize prices by exchange rate.As a newly industrialized countries, the industrial structure is upgrading constantly, making that the current China’s import trade structure gradually from the final product mainly into intermediate input products which is given priority to, a lot of social production essential like energy and raw materials especially relies on import, so study the RMB exchange rate pass-through from the perspective of imported inputs and the incomplete pass-through theory research have strong realistic directive significance. Because it’s very useful to study the inner link of inputs and outputs between different departments by intermediate of input output technique, this paper will use the input output method to analysis the degree and the trend of each departments’output price and the total price index influenced by the change of import input products’price systematically.First this paper will elaborate theoretically the influence way of imported inputs affect the department output and the total price, then deduce the empirical test model through the equilibrium price model, the single influence and total impact analysis should be established on an assumption. This paper use1995,2000,2005China’s import noncompetitive input-output table to empirical test this problem. This kind of input-output table is widely used in international trade study because the intermediate input part of this kind table is divided into domestic input and imported input. At the same time, this paper also made some certain theoretical discussion about this kind input output table, point out that because of the existence of some substitution in each department’s import and domestic input part, the actual noncompetitive input-output table should be interval model, the interval length is the import and domestic input’s substitution part.Then this paper uses the measure model first to empirical test the different departments’output price variation influenced by exchange rate fluctuations caused the imported input price change, according to the analysis of the equilibrium price model, it can be considered that the difference in foreign dependence degree between different departments leads to the differences in transfer rate. And for the total influence in all kinds of price index, the study found that the influence of exchange rate fluctuations will be weakened gradually along the price chain, the proportion of total imports in consumer goods, manufacturers’pricing strategy and the distribution cost are the main reason. The research result of three final-use price index reflects the trend of attaching great importance to investment but lighting consumption in our country. Then this paper longitudinal compared the influence of different departments’ output price and total price index in different periods by exchange rate fluctuations, the increasing of the high technology sector’s imported input use in recent years is the main factor, while Taylor’s inflation environment hypothesis cannot explain this change. The transmission degree of the final consumption price is nearly unchanged, reflecting the China’s ability of resisting external price’s shock is stronger. The investment price which influenced by exchange rate fluctuation has a modest increase trend, inflecting that it’s more obvious the current domestic economy’s developing heavily depends on investment. Finally this paper gets some enlightenments.