RMB Real Effective Exchange Rate Change On The Influence Of The Balance Of China-EU Trade

The exchange rate has always been a tool to adjust the balance of trade in theory,but the exchange rate is not consistent with the theory in terms of the fact that the exchange rate influences the balance of trade in China.Therefore,based on the previous research on the impact of exchange rate changes on trade balance,this paper chooses to study the relationship between exchange rate and China EU trade balance from the perspective of the RMB real effective exchange rate.This paper studies the effects of RMB exchange rate on China EU trade balance,the real effective exchange rate of RMB to define and measure,and then combined with the previous literature,this paper takes the related theories,this paper mainly introduces the elasticity analysis method,absorption analysis method and J curve effect theory.According to the theory,first descriptive statistics on the real effective exchange rate of RMB and China EU trade,analysis of the trend of their relationship and the possible influence,found in the descriptive statistics,China EU trade balance and real effective exchange rate of RMB has the same change trend,so the combination of theory analysis,the RMB real effective exchange rate will affect the trade between China and the EU payments to a certain extent.Then,taking the monthly data from August 2005 to October 2016 as the sample,the empirical model is established.The real effective exchange rate,the national income and the European debt crisis are taken as explanatory variables.The time series were analyzed using Eviews statistical software,and dynamic analysis,impulse response and variance decomposition can be found in the short term,exchange rate changes will produce significant influence on the trade balance,the national income will influence.In the long term,the real effective exchange rate of RMB and China trade balance effect is not significant,that in the long term,the exchange rate is not the decisive factor in regulating the balance of trade,but also need to consider other factors such as the impact on the trade balance,trade structure,trade mode,national income,exchange rate pass and other factors.Finally,combining theoretical and empirical analysis,some suggestions are put forward.