Title :
Effects of RMB Interest Rate and Exchange Rate Adjustment on Trade Balance
Author :
He, Chengying ; Yu, Kaijiang ; Shao, Zuoyin
Author_Institution :
Dept. of Strategic Res., Guosen Security, Shenzhen, China
Abstract :
This paper studies the impacts of RMB interest rate and exchange rate adjustment on China\´s trade balance using VEC model. Based on cost decomposition method, pricing-to-market and trade equilibrium equation, we observed that trade balance is negatively related to exchange rate, relative national income, relative interest rate, relative wage and relative price of inputs. RMB appreciates had "Inverse J-curve effect" on trade balance, and the rise of RMB\´s relative interest rate would reduce trade balance.
Keywords :
economic indicators; exchange rates; pricing; China; RMB interest rate; VEC model; cost decomposition method; exchange rate; exchange rate adjustment; inverse J-curve effect; pricing-to-market; relative input price; relative interest rate; relative national income; relative wage; trade balance; trade equilibrium equation; Business; Economic indicators; Elasticity; Equations; Exchange rates; Mathematical model; Production; exchange rate; interest rate; pricing-to-market; trade balance;
Conference_Titel :
Business Intelligence and Financial Engineering (BIFE), 2011 Fourth International Conference on
Conference_Location :
Wuhan
Print_ISBN :
978-1-4577-1541-9
DOI :
10.1109/BIFE.2011.53
