The Conduction Of Export Prices And The Appreciation Of The Renminbi Chinese Enterprises Competitiveness,

As a core variable in the open macro-economic system, exchange rate plays a very important role in keeping a country's internal and external economic balances. Studies on ERPT (exchange rate pass-through) show that the fluctuations of exchange rate are not reflected one-by-one in the import and export prices, the situation called incomplete pass-through by international economic theories. In July 2005, the RMB ended its pure peg to the US currency and took on the steady and speedy appreciation process. Up till now, the exchange rate between RMB and the US dollar has risen by more than 10% with ever-increasing volatility. Given this situation, it's very useful to correctly estimate RMB's pass-through onto China's export prices which will help us learn the differences of competitiveness among various industries. And the study will also shed light on the drawing of exchange rate, industry construction and marketization policies.The paper studies exchange rate pass-through (ERPT) to China export prices at the sectorally disaggregated level. Our estimation strategy is based on VAR models allowing for endogeneity of the explanatory variables. We identify the structural shock with Cholesky decomposition and use impulse response functions to show the influence on export prices by exchange rate shock. The main findings are large heterogeneity of ERPT across industries and no evidence for instability of ERPT over time. The paper is arranged as follows: The first part is introduction and the second one dose the research survey. Then the third part describes the micro-foundation of ERPT theory. The fourth and fifth parts are the core of the paper with data description, VAR model construction and regression outcome in detail. Finally we do the summary in the last part.