The Study On The Transfer Effect Of RMB Exchange Rate Fluctuation On China's Inflation

Since July 2005,the exchange rate reform,the RMB exchange rate volatility is gradually expanding,the RMB exchange rate appreciation of the channel into;in the meantime,domestic prices continue to rise,the formation of the RMB exchange rate and prices are rising situation,the RMB appreciation and internal devaluation and deposit.Therefore,study on the effect of RMB exchange rate volatility on China's price and macro economy,the correct implementation of fiscal and monetary policy of monetary authorities,has important practical significance to curb domestic inflation.This paper first introduced the theoretical deduction and model transfer effect from the exchange rate elaborated on the relationship between the exchange rate and price,comprehensive international trade channels and international capital flow channel analysis of transmission mechanism of exchange rate transfer and exchange rate transfer effect on China's macro economy;secondly,based on the actual data of RMB effective exchange rate and CPI in China in 2005 since the change trend from macroscopic reality study of nominal effective exchange rate of RMB and inflation and changes in direction;then,with the monthly data from July 2005 to December 2016 as the sample,select the residents consumer price index,the RMB nominal effective exchange rate,industrial added value,the narrow money supply M1,import price index and other variables to establish VAR model and by using the impulse response function analysis,Grainger causality analysis to examine between variables for Fruit relationship and dynamic relationship.The empirical results show that the effective exchange rate of RMB and the consumer price index for Grainger,the change of RMB nominal effective exchange rate impact on consumer prices have certain explanatory power,but have not fully transfer effect on import prices and domestic consumer prices,and international trade channels,the exchange rate pass through effect is negative,international channels capital flow,exchange rate pass through effect is positive in the short term,and RMB nominal effective exchange rate through international trade channel influence on consumer price effect is greater than the nominal effective exchange rate of RMB through the channel of international capital flow effects on consumer price effect,so the effect of exchange rate changes on inflation started positively related,subsequently presented reverse change.