Exchange Rate Pass Through Of Export Prices Of Chinese Firms Based On Heterogeneity Perspective

Since Krugman pioneered the pricing-to-market theory in 1986,a large number of relevant theoretical and empirical studies have shown that a change in the exchange rate of one unit often causes a change in the import and export prices of less than one unit.When the exchange rate changes,the export enterprises have a strong willingness and ability to adjust the selling prices of the products so as to increase their market share and profits in export.Based on the theory of heterogeneous firms,this paper combines the theory of cost plus theory with the theory of imported intermediary inputs to study the effect of the export market share and the heterogeneity of imported intermediate products on the exchange rate pass-through effect of export prices.The model is divided into three parts:demand and markup,production and imported intermediate inputs,and equilibrium and exchange rate pass-through.as far as demand is concerned,the heterogeneity of firms is reflected in the market share.In terms of production,the heterogeneity of frims is reflected in the share of imports of intermediate goods.In the aspect of empirical research,this paper uses the data from 2000-2006 Customs Database and China Industrial Enterprise Database to carry out empirical analysis on four dimensions of frim-product-country-time.The overall regression sample shows that for every 10%appreciation of RMB exchange rate,the export price of RMB-denominated will drop by 0.43%,indicating that the exchange rate pass-through effect of export prices is 95.7%.The import intensity of intermediate goods of enterprises will have a very significant impact on the exchange rate pass-through coefficient.Every 10%increase in the share of imported intermediate products,the exchange rate pass-through coefficient will decrease by 1.2%.At the same time,the export market share of frims also has a very important influence on the exchange rate pass-through,and the exchange rate pass-through coefficient will drop by 1.9%for every 10%increase in the market share of firms.We also find that trade patterns,ownership patterns and per capita income levels of exporting countries all have an impact on the exchange rate pass-through effect of export prices.Therefore,providing a reasonable and relatively stable exchange rate for the country is an effective way for exporters to reduce their export risks.At the same time,we should speed up the development of the foreign exchange market,enrich foreign exchange products and effectively reduce the risk of exchange rate fluctuations.Frims should actively participate in the global division and expand the proportion of imports that are invested in the middle inputs.At the same time accelerate technological innovation and enhance business productivity.Expanding export market share,so as to effectively avoid export exchange rate risks and increase corporate profits.