An Empirical Study On Conductive Relationship Between Money Supply, Exchange Rates, Import And Export Trade

Since the financial crisis in 2008 sweeping the globe, some countries’ economy are all affected. Economic and trade worldwide also triggered two very significant changes. First, tight monetary policy failure, the United States and other countries moderate capital in different forms to implement a loose monetary policy that is printing money to boost the economy. Second, the 2008 trade worldwide are affected by the financial crisis sharply reduced, until around 2012 before gradually recover to the level before 2008. When the global financial crisis broke out, a significant change in the economy and world trade reveals the existence of a significant link between monetary policy and international trade. Based on these two points, the paper plans to establish a number of empirical model, the exchange rate as an intermediary role, to explore the money supply by the countries to implement loose monetary policy caused fluctuations in the conduction of bilateral trade relations among the countries.In exploring the money supply impact on exchange rate fluctuations conduction, the paper chooses the money supply the United States, Japan, Britain, China four countries to study as an initial point. There are three reasons, first, the US monetary policy in the world have caused a very big impact; Second, although Japan’s monetary policy is not desirable, but in the Asia Pacific region trade relations between Japan and China are very close; the third is the UK’s loose monetary policy effects Well, from quantification to qualitative policy China can learn from. In exploring the impact of exchange rate on conducting import and export trade, the article only empirical analysis of Sino-Japanese bilateral trade model. The reason is that close Sino-British trade index is low, the Sino-British trade relations loose.Based on the between money supply, exchange rates, import and export trade of these three elements of conducting relations theory, and then explore a number of variables between these three elements in place to contain the long-term or short-term, positive or negative, immediate or lag relationship. The main content of this paper is divided into two empirical parts, the first part is to analyze the money supply to exchange rate fluctuations from the conduction relationship, after part of the main changes in the level and volatility of the exchange rate pass analyze the impact of the import and export trade. The first part of the empirical content is divided into three:first, taking into account national synchronization without additional money supply measure the impact of currency fluctuations on the paper by the correlation coefficient of broad money supply relatively Shikoku volatility and cross-correlation coefficient for making linkage analysis of the money supply cycle; second, through the establishment of an autoregressive distributed lag model to explore the US dollar, Japanese yen, British pound, long-term impact on the money supply fluctuations in the RMB real effective exchange rate; and third, by establishing a structural vector auto-regression model Structural analysis of the impact of currency effects on the RMB exchange rate. The latter part of the empirical content is also divided into three:first, to study through the establishment of bilateral nominal exchange rate autoregressive distributed lag model, the relative output of the two countries, the impact on relative prices between the two countries and Japan, the Sino-US trade balance; Second, according to the stability characteristic variables establish autoregressive distributed lag model or error correction model to analyze the growth of broad money-year RMB, Japanese yen, the dollar and the RMB exchange one hundred yen, the real exchange rate of RMB against the US dollar on Sino-Japanese, affect Sino-US trade balance; and third, import and export equations were established to analyze the impact of the volatility of the real effective exchange rate, import or export the commodity price index, national income for the import and export trade.According to summarized the empirical results, we can draw the following conclusions. First, the dollar and the broad money supply fluctuations in the pound were ahead of RMB three months, five months, the US dollar, the British pound and the money supply fluctuations in the RMB is a positive correlation. Second, the US dollar, Japanese yen, fluctuations in the RMB money supply there is a significant negative effect on the real effective exchange rate, but the cyclical impact of the three, the immediate impact is different. Third, with increasing the lag period, the degree to explain the impact of dollar currency up to 32.5%, far more than the pound and yen currency impact, and the dollar currencies have a longer-term impact of sustainability. Fourth, the money supply conduction through the exchange rate fluctuations to affect the trade balance, but the exchange rate’s pass is incomplete. Fifth, the Sino-Japanese bilateral nominal exchange rate against the Japanese trade balance will have a significant long-term negative effects of the nominal exchange rate against the US-China bilateral trade balance will generate significant long-term positive effect, will result in the issuance of RMB currency Japan trade deficit, the dollar slowed the issuance of currency trade surplus will shrink. Sixth is the volatility of the real effective exchange rate in the long term for China’s imports and exports are all negative effects.Finally, innovation and deficiencies are reflected in the following. This paper attempts to clarify all innovation is conducting relationship exists United States, Japan, Britain and the four countries of the money supply, exchange rate and import and export trade between the conduction and complex relationship between the degree of explanation can be used in addition to the impact and significance to Compare Scalar difference on, you can also measure the impact in the end is a long-term or short-term, positive or negative, immediate or delayed to compare the difference vector on. Taking into account national monetary policies are not synchronized supply fluctuations in national currencies would make itself difficult to compare, and then made the national currency supply fluctuations linkage analysis. The disadvantage is that the level of knowledge is limited empirical analysis alone Japanese, Sino-US bilateral trade, there is no interaction modeling and analysis of multinational trade among these will be further remedy in subsequent studies.