Asymmetry Of Incomplete Exchange Rate Pass-through：An Empirical Research Based On Import Price

As the important factor that affect macroeconomic development in the open economicenvironment, Exchange rate’s theoretical and empirical research has been continuouslydeveloping. And the asymmetric effects of exchange rate pass-through become the hot topic.Discussing the problem of exchange rate pass-through, analysising the factors of Incompleteexchange rate pass-through, and examing the asymmetry effect of exchange ratepass-through, will be of great significance for our country to formulate reasonable adjustmentpolicies on balance of payments to keep promoting the internal and external development.This paper firstly reviews the scholars’ related research incompleteness and asymmetryof exchange rate pass-through from domestic and foreign and summarized the relatedanalysis theory about incompleteness and asymmetry of exchange rate pass-through Thenestablish the empirical analysis model based on the import profit model, and do the researchfrom two aspects. One is to set up the VECM model to explore the impacts of RMBexchange rate fluctuation pass through to price. Moreover, it studies the trend of developmentof the pass-through and gives three factors to explain the phenomenon. The other it focuseson the asymmetric effect of exchange rate pass-through. It is found through introducingdummy variable to study the differences of exchange rate depreciation and appreciation onimport price index pass-through, and the differences of magnitude of changes in exchangerate. Finally, make useful conclusion according to the empirical analysis, put forward torelevant policy suggestions, at the same time, point the limitation and predict the furtherresearch.The empirical result shows exchange rate fluctuation passes through import priceincompletely; the pass-through degree shows W shape; the effect degree of the RMBdepreciation Pass-through to import Prices is higher than RMB appreciation; the larger size isthe changes in RMB exchange rate, the greater effect is the pass-through to import prices.