The Pass-Through Effect Of RMB Exchange Rate Into Export Prices

As a core variable of the open economy system,exchange rate plays a significant role in keeping the balance between internal and external economies of a country.Recently, more and more literatures turn to study the exchange rate pass-through effect on traded goods, aiming at explaining how exchange rate adjusts the balance of payments.Researches on ERPT(Exchange Rate Pass-through) show that the fluctuation of exchange rate are not reflected completely on the prices of import and export commodities, which is called incomplete pass-through in international economic theory.Since the economic crisis in 2008, the exchange rate of RMB contitues to appreciate under the circumstance of weak demand in the world, which therefore has brought great negative influence on China’s exports.And so, to evaluate the pass-through effect of RMB’appreciation on export price,and then compare the competitiveness of different traded goods on that basis,will be of great practical significance.This paper studies the exchange rate pass-through effect on China’s export prices at a disaggregated level by using one-digit SITC traded goods to construct the export price indices.Our estimation is based on Engel-Granger cointegration approach.The empirical research has found that the ERPT effect on export goods is incomplete in all categories.And the coefficient varies greatly between different classified goods.We also have a analysis of export competitiveness on the basis of estimation results.The paper is organized as follows:The first chapter is the introduction and the second chapter does the literature review.Then the third chapter gives a descriptive analysis of RMB’exchange rate and China’s export trade.The fourth chapter describes the micro-and macro- foundation of EPRT theories and the fifth does the empirical analysis.Finally, we gives the conclusion of the paper and offer some policy proposals.