The Research On The Effect Of Real Effective Exchange Rate Changes On Shandong’s Export Trade Structure

Exchange rate is the important adjusting lever for international trade. The changes ofexchange rate affect a country’s export through the price mechanism. Real effectiveexchange rate can reflect real competitive power of the currency, because it is obtainedfrom the nominal effective exchange rate rejected inflation factor.With the development of china’s economic and improvement of international status,the international competitive power of RMB is become stronger. In the recent years,appreciation of RMB brings challenge and opportunity for china’s export. Shandong is aprovince with developed economic, export is very important for the economy ofShandong province. Under the circumstance, studying the effect of real effectiveexchange rate on Shandong’s export structure has practical significance.This paper studies the effect of real effective exchange rate on Shandong’s exportbased on normative analysis and empirical analysis. Firstly, we introduce the theory andtransmission mechanism on the relationship between exchange rate changes andinternational trade, and then analyze the evolution of RMB and the present situation ofShandong’s export. In the part of empirical analysis, employing VAR models withco-integration, we analyze the effect of real effective exchange rate on Shandong’s exportvalue and export trade structure. The result is that appreciation of RMB improvedShandong’s export value and structure.According to the empirical results, we should increase the R&D investment,improve the capability of independent innovation and improve the technology contentand the added value of export products to improve their competitive power. Only in thisway, can Shandong optimize export structure.