The Effective Exchange Rate Of RMB On The Impact Of China’s Import And Export Commodity Price

Based on the theory of purchasing power parity, exchange rate changes can regulate the importand export commodity prices, which affect the quantity of the import and export trade, and topromote international trade balance. This is the reason why the international countries headed bythe United States to revalue its currency to reduce China’s trade surplus.In the economic operation,the exchange rate changes can be able to have how much impact on the import and exportcommodity prices in the end. In this context, the paper reveals the internal relations of exchangerate and China’s import and export commodity prices, which is the essay’s main line. Meanwhile,using co-integration and error correction model analysis method, and according to the sample datafrom January2000to December2012, it systematically analyzes the effect of the effectiveexchange rate of RMB to China’s import and export commodity prices, and the exchange rateregime before and after the reform of the RMB effective exchange rate of the different impact ofChina’s import and export commodity prices compared analysis.Empirical findings, in the long term, RMB effective exchange rate on the imported goods priceelasticity was-0.53. When the RMB effective exchange rate appreciated by1%, the0.53%declinein the prices of imported goods in China; However, when RMB effective exchange rate movementson the price elasticity of export commodities was only0.11, that is,1%appreciation of the effectiveexchange rate of RMB, China’s export commodity prices rose0.11%, and the empirical resultsconsistent with economic theory, but with less flexibility. This shows that the main tone of theexchange rate policy of our country is the appreciation of the RMB, which has failed to effectivelyadjust the import and export commodities, and improve China’s terms of trade. This should arousethe attention of the government.The text follows the research method that is the combination of theory describes and empiricalanalysis. It is divided into five chapters. The first chapter outlines the research background, researchmethods, research ideas and innovations, and reviews of the theoretical models and researchoverview of the impact of exchange rate on impart and export commodity prices, which provides atheoretical basis for the empirical analysis. The second chapter respectively described thedevelopment and the current situation of the RMB exchange rate and import and export trade.Chapter three to four as the core of the paper, using the co-integration and error correction model tostudy the price of the RMB effective exchange rate of import and export commodities before andafter the impact of the exchange rate regime reform, the RMB effective exchange rate of acomparative analysis of the different effects of the import and export commodity prices. Chapterfive according to the empirical results, make policy recommendations.