An Empirical Study On The Impact Of RMB Exchange Rate Changes On U.S. Unemployment Rate

After the subprime mortgage crisis of U.S. which triggered a global financial crisis. The U.S.government launched plan to double exports in order to overcome the economic difficulties.but it’s difficult to implement as the domestic political stalemate,the deficit and other reasons.Some U.S. lawmakers and economists,such as Paul Krugman and Schumer etc. havecriticized the implementation of China’s mercantilist policies which “undervalued”RMB.Then the Chinese gained unfair competitive advantage in trade with U.S.. Resulting inU.S.unemployment rate remains high in the post-crisis era.Therefore, empirical studies ofRMB appreciation can or can not alleviate the high unemployment rate of U.S. has a veryimportant theoretical and practical significance.Based on existing research,this paper fist analysis the reflection of U.S. unemployment to thechanges of Real Effective Exchange Rate in short and long term which based on1994-2012empirical data. Studies have shown that RMB real effective exchange rate appreciation in thelong term deteriorate the unemployment of U.S.. In the short term, the changes of RealEffective Exchange Rate has no effect on the U.S. Unemployment. This may be due to therelationship in many industries between China and the U.S.are complementary rather thancompetitive relationship.Devaluation of RMB favor both countries,while the appreciation ofthe RMB are not conducive to both China and U.S..And then analysis the reflection of every U.S. industry’s unemployment to the changes ofReal Effective Exchange Rate which based on2005-2012empirical data. The result showthat the changes of Real Effective Exchange Rate has not very impact on the overall andevery industry’s unemployment of U.S.. Therefore, the RMB appreciation will not ease U.S.high unemployment. RMB real effective exchange rate may be not the main reason thatcaused the high unemployment of the U.S., the high unemployment of U.S.is mainly becauseits own deindustrialization and excessive financialization which caused the imbalance ofeconomic structure.