Research On The Impact Of RMB Real Effective Exchange Rate On The Total Output Of Shandong Province

As the capital account of China gradually liberalizing, internationalisation speed of the RMB is getting faster. RMB is going towards the world, so the government’s control of the RMB’s exchange rate is gradually loosing, as well as the RMB exchange rate flexibility is gradually increasing. Especially, RMB exchange rate has fluctuated, and the amplitude has increased gradually since 2015, which has brought more significant influence on the economy. Usually, the economic growth of an area would have little influence on its country’s exchange rate, but a country’s exchange rate change on the impact of itsa regional total output growth would be very significant. Therefore, the RMB exchange rate changes need to be considered in the research of total output of Shandong province.Since the second exchange rate has reformed in 2005, RMB real effective exchange rate has been in a rising channel. According to the calculation rules of RMB real effective exchange rate published by the bank for international settlements, from 2005 to 2015 RMB real effective exchange rate rose by nearly 50%, according to the existing theoretical analysis, if a country or a region is the exporting country or region, the country’s currency appreciation would go against their own or a certain area of the domestic exports and output growth. So based on the existing theory and the actual situation of shandong province, using open macroeconomic model, with import and export, foreign direct investment, consumption and other factors, this paper will analysis the RMB real effective exchange rate change on the influence of total output in shandong province.This paper is divided into five chapters. The first chapter is the introduction part, mainly introduced this article background and significance of topic selected, research ideas and methods, the research content and framework, innovation and deficiency of this article, and combing the existing theory and method, form literature review of this paper; The second chapter is theoretical basis part, mainly expounds theoretical basis of the RMB real effective exchange rate movements affect the total output; The third chapter is the status analysis part, mainly analyzes two aspects, one is to analyze the evolution of RMB real effective exchange rate, the second is to analyze the RMB real effective exchange rate change on the influence of the total output of shandong province; The fourth chapter is the empirical part, this part is to test the RMB real effective exchange rate on the influence degree of total output in shandong province, The empirical results show that for every 1% increase(decrease) on the RMB real effective exchange rate, 0.1680% total output decreases(increase) in shandong province; The fifth chapter is the policy suggestion part, on the basis of empirical analysis, put forward policy. Suggestions on dealing with the RMB exchange rate changes in shandong province, in order to reduce the RMB exchange rate change on the influence of total output in shandong province.