Abstract
With the development of economic globalization, the economic ties between countries in the world more and more closely, prices and the exchange rate are the core economic variables in an open economy. In this study, we make a statistical analysis of RMB real effective exchange rate and agricultural food prices data from the year of 1990 to 2014. From the empirical analysis, the result shows that RMB real effective exchange rate will effect on agricultural food prices. LnREER at lag 1 period increased one percentage can drive LnAFP growth by 0.015%; LnREER at lag 2 period increased one percentage can drive LnAFP growth by 0.187%, so the effect of RMB real effective exchange rate on agricultural food prices is obvious. Based on granger causality test, it shows that LnREER is the granger reason to LnAFP, which means RMB real effective exchange rate is the reason to agricultural food prices increase. On this basis, we have put forward relevant policy suggestions.
Highlights
With the development of economic globalization, the economic ties between countries in the world more and more closely, the exchange rate as price two national currencies nominal play a link role in the world economic exchanges (Juan and Reboredo, 2014)
With the domestic market and the world market integration to speed up the pace, the domestic price level has been inevitably affected by external shocks (Huang, 2008), such as the impact of the international market price fluctuations and exchange rate appreciation depreciation etc
ADF unit root test: Data stable is the premise of establishing Vector Auto Regression (VAR) model, an Augmented Dickey Fuller test (ADF) is a test for a unit root in a time series sample
Summary
With the development of economic globalization, the economic ties between countries in the world more and more closely, the exchange rate as price two national currencies nominal play a link role in the world economic exchanges (Juan and Reboredo, 2014). We research on the fluctuation of exchange rate impact on food prices in emerging country as China, it will have important theoretical and practical significance whether for economists and for the government. With the domestic market and the world market integration to speed up the pace, the domestic price level has been inevitably affected by external shocks (Huang, 2008), such as the impact of the international market price fluctuations and exchange rate appreciation depreciation etc. Exchange rate movements exactly what will be the impact on the domestic price level and impact the implementation effect on domestic monetary policy, so is has become the common concern
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