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The Effect of RMB Exchange Rate Volatility on Import and Export Trade in China

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  • Wanhui Jiang

Abstract

The exchange rate volatility always plays a key role in import and export trade. This paper investigates the effect of nominal RMB exchange rate volatility on economic growth in China from 1981 to 2012. Through the ADF stationary test, the co-integration test, and the associated econometric model and the empirical analysis, the paper concludes that in the long run, exchange rate change has a positive impact on import and export trade. Therefore, it is necessary to take relevant policies and measures to adjust the RMB exchange rate at a reasonable level to avoid the RMB sharp appreciation in the short-term to promote a rational and efficient development for China's foreign trade.

Suggested Citation

  • Wanhui Jiang, 2014. "The Effect of RMB Exchange Rate Volatility on Import and Export Trade in China," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 4(1), pages 615-625, January.
    • Handle: RePEc:hur:ijarbs:v:4:y:2014:i:1:p:615-625
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    References listed on IDEAS

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    1. Rose, Andrew K. & Yellen, Janet L., 1989. "Is there a J-curve?," Journal of Monetary Economics, Elsevier, vol. 24(1), pages 53-68, July.
    2. Chou, W. L., 2000. "Exchange Rate Variability and China's Exports," Journal of Comparative Economics, Elsevier, vol. 28(1), pages 61-79, March.
    3. Zouheir Abida, 2011. "Real Exchange Rate Misalignment and Economic Growth: An Empirical Study for the Maghreb Countries," Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 14(2), pages 87-105, November.
    4. Zouheir Abida, 2011. "Real Exchange Rate Misalignment and Economic Growth: An Empirical Study for the Maghreb Countries," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 2, pages 45-61, July.
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    Cited by:

    1. Loredana Jitaru & Lorena Florentina Dumitrașciuc, 2019. "The Influence of the Depreciation of China's Domestic Currency on Trade Relations with the EU," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 33-38, August.
    2. Pabai Fofanah, 2020. "Effects of Exchange Rate Volatility on Trade: Evidence from West Africa," Journal of Economics and Behavioral Studies, AMH International, vol. 12(3), pages 32-52.
    3. Junaid Masih & Dongsheng Liu & Javed Pervaiz, 2018. "The Relationship between RMB Exchange Rate and Chinese Trade Balance: Evidence from a Bootstrap Rolling Window Approach," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 10(2), pages 35-47, February.
    4. Pabai Fofanah, 2020. "Impact of real exchange rate fluctuations on aggregate cocoa and coffee exports in Sierra Leone," Journal of Economics and Behavioral Studies, AMH International, vol. 12(2), pages 34-56.

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