The Trade Structure of the Total Manufactured Goods: A New Perspective of Research on the RMB Real Exchange Rate Model

Abstract

Different from the traditional researches only focus on the relationship between the real exchange rate and trade balance, terms of trade, gross domestic product. This paper led the relevance between real exchange rate and trade structure Balassa-Samuelson effect. From the perspective of the total manufactured goods trade structure, an empirical study was done with annual data 1981-2012 by co-integration technique. The results showed that China's total trade structure had the co-integration relationship with the real exchange rate, and it had a more obvious effect on the incidence and model fitting. So four basic economic factors were chosen which were the variables of aggregate trade structure, trade conditions, openness, monetary supply, these constructed RMB equilibrium real exchange rate estimation model. It would give theoretical supports to exploration of RMB real exchange rate.