How the real exchange rates of RMB and wage ratio changes affect export import industries fluctuations?

Abstract

Background/Objective: The purpose of this paper is to reveal the effect of real exchange rate changes on export-import proportion and industries’ export or import proportion under the average wage ratio change using ARMA. Methods/Statistical analysis: Using ARMA and Panel data Model, after inferring a new formula according to the firms’ heterogeneity model and rural-led real exchange rate appreciation (RERA) model. Findings: Given the average changes of wage ratio, the real exchange rate appreciation can lead to the decrease of proportion of export industries, lead to the increase of proportion of import industries, vice versa. Improvement/Application: To further verify these effects, the robust estimations in ARMA and Panel data model using monthly industry-data from manufacturing industry-data (1996-2019, inedible raw material, chemical products and machinery-transportation equipment) and the whole export industry-data (1994-2019) between the U.S. and China suggest the similar results.