Short-run And Long-run Effects Of Exchange Rate Volatility On Commodity Trade Between China And America

Since the reform of the RMB exchange rate in 1994,the scale of trade between China and the United States has continued to expand and the degree of dependence on trade has increased gradually.China’s trade surplus with the United States has grown rapidly.The trade imbalance between China and the United States has attracted widespread attention from scholars at home and abroad.Faced with the pressure from the United States to appeal for the appreciation of the RMB,the Chinese government conducted two reforms of the exchange rate system in 1994 and 2004.The nominal exchange rate of the RMB rose steadily from 8.43 in 1995 to 6.12 in 2016.At the same time,the trade balance between China and the United States increased continuously.The problem of trade imbalances has become increasingly severe.The adjustment of the RMB value has not only failed to achieve the expected results,but has also affected the normal exchanges between China and other trading partners.From 2015 to 2017,the Fed increased interest rates four times.The steady appreciation of the RMB turned it into two-headed volatility and rapid devaluation.The exchange rate and Sino-US import and export trade have once again become the focus of attention of all walks of life.This article focuses on this hot issue and studies the relationship between the exchange rate and the trade balance between China and the United States.Using the econometric model,it analyzes whether the exchange rate is a significant cause of the import and export trade,and what are the root causes of the trade imbalance between China and the United States.First of all,this article starts from the theory of trade theory and the literature review at home and abroad,summarizes the basic concepts,the traditional exchange-trade theory and the existing research results,and then determines the research direction and specific methods of this paper.Second,based on the statistical description of the exchange rate between 1995 and present and the development trend of trade between China and the United States,and on the basis of qualitative analysis,the reasons for possible imbalances between China and the United States were proposed as the theoretical basis for the selection of variables;using the GARCH model for 2008-2016.The annual exchange rate data is measured,quarterly data of exchange rate fluctuations are obtained,and they are included as independent variables in empirical studies;OLS regression and ECM models are selected for static model construction,and exchange rates,US GDP,China GDP,foreign direct investment and How do exchange rate fluctuations and other factors affect China-US import and export trade in the long and short term? Thirdly,a dynamic vector auto-regressive model is constructed to explore the dynamic and lagging economic relations between variables through impulse response and variance decomposition.Finally,it systematically analyzes the real reasons for the formation and aggravation of trade imbalance between China and the United States,and for these reasons,gives corresponding policies and recommendations.