| In international trade, the terms of trade and exchange rate are two very important economic indicators. The price terms of trade,which is the input and output’s exchange rate measured by domestic currency or foreign currency, can measure the international competitiveness of one county’s export commodities and reflect the actual the resources flow into or out and changes of national welfares during participating international trade, that would directly relate to all countries’ trade benefits. Exchange rate is the rate of domestic currency with foreign currency. The changes of exchange rate, will inevitably lead to the change of exports and imports’exchange rate measured by local currency or foreign currency. So to correctly analyze the influences on all kinds of terms of trade made by the changes of RMB exchange rate, is helpful for us to take active measures. By doing these, we can improve the international competitiveness of our exports and create conditions for us to take right trade policy and carry out RMB exchange rate reform.This paper firstly summarized the basic theory of the exchange rates and trade conditions in international economics and analyzed the classic Marshall Lerner conditions and the transmission mechanism of exchange rate to trade condition. Secondly, basing on the collected statistical data, this paper analyzed the changes of the RMB exchange rate regime, the fluctuations of RMB nominal exchange rates and the movements of our all kinds of trade conditions. This paper also discussed the influence path and influence results on all kinds of trade condition by RMB exchange rate changes. Thirdly, we selected analysis variables and establish the empirical analysis model to analyze the effects on our all kinds of trade condition by RMB exchange rate changes. Then we choose the impulse response function and variance decomposition to measure the transfer effect size on various trade conditions by exchange rate and compare the difference between variables influence. According to the results, we find that in different RMB appreciation periods, the influence direction on trade the condition by each variable will change. So that the sequence of the factors affecting terms of trade will also change. Specifically, RMB appreciation and the change of our all kinds of terms of trade have granger causality relationship. RMB appreciation will lead to the fluctuation of our price terms of trade and income terms of trade. However, the influence tends to balance. At the same time, RMB appreciation has negative impact on our early manufactured products’ single factor terms of trade (1994-2005). But RMB appreciation has positive effects on our later manufactured products’ single factor terms of trade (2005-2012). From time angle, exchange rate is the main reason for the improve of manufactured products’ single factor terms of trade. |
