Real effective exchange rate volatility and China´s trade

The exchange rate is regulated to achieve economic and external balance. Studying the impact of Real Effective Exchange Rate Volatility on the import and export has important guiding significance for the formulation of macroeconomic policy. In this paper, the AR-GARCH models and co-integration theory is used to analyze the effect of the real effective exchange rate volatility on China´s trade. The results show that there is the co-integration relationship between Renminbi (RMB) real effective exchange rate fluctuations and China´s import and export in the long term, but the impact is not significant in the short term.