Empirical research on effect of exchange rate pass-through into China's export price

Author(s): Chen Jiatao

Exchange rate pass-through into prices (ERPT) is a very important mediate link between exchange rate and its economic effects. And the size of export effect induced by exchange rate change depends on the elasticity and speed of export price ERPT to some degree. On the basis of SITC, this paper uses Distributed Lag Model and Co-integration to research the elasticity of Chinese export price ERPT from 1995 to 2007. The result indicates China’s export price shows obvious incomplete pass-through in the long run. The elasticity is slightly larger than 0.5. And there is a big difference among different products’ elasticity. The products which have strong competitiveness in the world market own more power to pass the cost of RMB appreciation and their elasticity is relatively bigger.

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