The Pass-through Effect Of The RMB Exchange Rate On Domestic Prices

Numerous studies have shown that the exchange rate has an important influence on price.In recent years,the overall appreciation of the renminbi has been on the rise.At the same time,domestic prices are also rising.This economic situation is contrary to traditional economic theory.With the gradual deepening of the marketization of RMB,the actual status of the impact of RMB exchange rate on domestic prices is worthy of attention.So far,domestic scholars have done a lot of research on the Influence of RMB Exchange Rate Pass-through,but few scholars pay attention to the characteristics of provinces' s exchange rate and its regional heterogeneity.This paper adopts the province's RMB effective exchange rate and uses the panel error correction model(ECM)to study the long-term and short-term effect of RMB exchange rate Pass Through on CPI.,based on the Provincial monthly data from January 2001 to September 2017.This article uses the province's RMB effective exchange rate to study the impact of RMB exchange rate volatility on the domestic price level in nation and province.The results show that the RMB exchange rate generally has a positive effect on domestic price,but the impact is weak.The aggregated RMB effective exchange rate masks the true information of each province.Therefore,when analyzing the Exchange Rate Pass-through at the provincial level,it is necessary to distinguish the nominal effective exchange rates of each province.These findings are conducive to the refinement of the RMB exchange rate research and provide new inspiration for policymaking.