The Study Of Threshold Effect Of Rmb Exchange Rate Fluctuation On Our Import And Export

Analyzing the effect of RMB exchange rate fluctuations on trade balance is very important to trade balance regulation. Many scholars studied the relationship between exchange rate and trade balance in different ways, but they did not reach a consensus. It is noteworthy that previous studies were carried out under linear models. With the rapid development of nonlinear theory, people gradually realize that using linear model to analysis economic may be wrong. This thesis combines the panel threshold regression model with elasticity approach to study the nonlinear relationship between RMB exchange rate and trade balance.Chapter1introduces the background and significance of this thesis, literature review, thesis structure and research methods. Chapter2is the theoretical basis of this thesis.This chapter discusses the elastic analysis, inculding the Marshall-Lerner condition, Bickerdike-Robinson-Metaler Condition condition and the J-curve effect. Chapter2also discusses the threshold panel regression model, inculding model estimation and hypothesis testing. Chapter3analyzes the trend of RMB exchange rate and trade balance, and the simple relationship between them. Chapter3shows that the impact of exchange rate on trade balance is not clear, which is different at different period. In order to get more accurate conclusion, Chapter4combines the panel threshold regression model with elasticity, and give a quantitative analysis of the threshold effect of RMB exchange rate on China trade balance under different exchange rate ranges and different exchange rate volatilities.The result of threshold panel regression model is also compared with the linear model. Under The linear model, the Marshall-Lerner condition does not hold. The resluts under threshold panel regression model are as follows:(1) Marshall-Lerner condition does not hold no matter in which exchange rate range.(2) When RMB exchange rate appreciates more than11.78%, the Marshall-Lerner condition holds, otherwise does not hold. According to the conlusions of Chapter3and4, Chapter5suggests improving RMB exchange rate forming mechanism, and make RMB more flexible. But the fundamental solution to the trade imbalance is expanding domestic demand and adjusting industrial structure. In response to RMB’s appreciation, China should improve the exchange rate risk awareness of foreign trade enterprises, and improve supporting measures of the exchange rate reform. Nonlinear model used in this thesis can more accurately describe economic phenomena. With strong theoretical and practical significance, this thesis has a reference value. But this thesis lacks micro theoretical basis, and the conclusions are obtained under certain assumptions. Exchange rate on the national economy is profound. Exchange rate policies should be carried out carefully and based on comprehensive consideration.