An Empirical Analysis of RMB Exchange Rate Pass-Through Effect in Yunnan Province

DOI

10.2991/isbcd-18.2018.22How to use a DOI?

Keywords

pass-through effect; exchange rate; CPI; PPI

Abstract

In microeconomics, the exchange rate pass-through effect does not only affect the pricing of products and production adjustment of the enterprises involved in international trade, but also has significant implications for the decision-making of consumers. This paper analyses the mechanism of exchange rate change to the price level in theory. A VAR model is used to test the relationship among the RMB nominal effective exchange rate, CPI, PPI, M2, the industrial value added and the oil price in Yunnan Province. The results show that there is a long-term co-integration relationship among these variables and in the medium- and short-term the exchange rate change has a negative impact on CPI and PPI. They imply that the appreciation of RMB exchange rate leads to the decline in the price of consumer goods and industrial products. Based on the results, some suggestions are put forward: the local government should upgrade and update industrial products; the local government should encourage the business in Yunnan to strength the competitiveness of products.

Copyright

© 2018, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Yili Hu
AU  - Haoran Wu
PY  - 2018/10
DA  - 2018/10
TI  - An Empirical Analysis of RMB Exchange Rate Pass-Through Effect in Yunnan Province
BT  - Proceedings of the 3rd International Symposium on Asian B&R Conference on International Business Cooperation (ISBCD 2018)
PB  - Atlantis Press
SP  - 106
EP  - 111
SN  - 2352-5428
UR  - https://doi.org/10.2991/isbcd-18.2018.22
DO  - 10.2991/isbcd-18.2018.22
ID  - Hu2018/10
ER  -