Research On The Spillover Effect Of The Federal Funds Rate Hike On China's Export Trade To The US

On December 16,2015,the US Federal Reserve announced that it raised the federal funds rate by 0.25%.It marking the official end of the seven-year quantitative easing monetary policy and moving into the interest rate channel.With the continuous improvement of economic openness,trade between China and the United States has been close,and the linkage of China's export trade activities with the United States has continued to strengthen.And studying the Fed's interest rate hike on China's export trade to the US has important practical significance.At the same time,China's export trade is in a period of structural transformation,and the export tendency of products is shifted from low-tech content to high-tech content.Therefore,paying attention to the export of industries with different technology intensities will help us to further understand the specific impact of the Fed's interest rate hike on China's export trade with the US and put forward more targeted opinions.The research method of this paper is combining theoretical analysis and empirical analysis.The theoretical research part is mainly based on the MundellFleming model to analyze the international transmission pathway of Fed's interest rate hikes,and use the realistic data to describe the possible impact on both.But the theoretical model analysis is difficult to determine the specific direction and spillover intensity of the international spillover effect.Therefore,on the basis of theoretical analysis,further empirical analysis is carried out.In the empirical reserarch section,a three-variable SVAR model was established,including the US federal funds rate,USD/RMB exchange rate,China's total exports to the United States.From the three levels of total exports to the United States?Industrial exports with different levels of technology intensity and different segment industry exports,we will explore the spillover effect of the Fed's interest rate hike on China's export trade to the United States.The results of research show that:(1)The spillover effect of the Fed's interestrate hike on China's export trade to the United States as a whole shows the negative effect of “being a neighbor”.Specifically,the short-term and long-term negative spillover,and medium-term positive spillover characteristics are shown,which is consistent with the realistic data analysis;(2)The spillover effect of the Fed's interest rate hike on exchange rate has the characteristics of short-term positive and long-term negative,it is consistent with theoretical analysis results.The long-term negative effect is mainly believed to be the improvement of China's exchange rate formation mechanism,making it more resilient to risk;(3)In terms of overflow direction,the Fed's interest rate hike has a more significant negaive impact on China's high-tech and middle-high-tech industries' exports to the US,but for low-tech and middle-lowtech industries,the positive spillover effect is more significant.The main reason may be that China's high-tech and middle-high-tech industries' export products are weak in the international competitiveness,and “income absorption effect” is stronger.But the low-tech and middle-low-tech industries are traditional export industries with advantages in China,the product export rigidity is strong,and “expenditure transfer effect” is more significant.In terms of the contribution rate of fluctuations,the Fed's interest rate hike contribute more to the high-tech industries and middle-high-tech industries than low-tech and middle-low-tech industries;(4)Specific to the different segment industries,the Fed's interest rate hike has the most significant impact on the general equipment manufacturing industry,the wood processing industry and the nonmetallic mineral products industry.