A STR Model Analysis of the Influence of RMB Exchange Rate Fluctuation on Domestic Inflation

摘要

The study on the effect of RMB exchange rate fluctuation upon domestic inflation, so far,has been confined to linear models. Using a nonlinear model STR and using monthly data more than 20 years, our study empirically shows that the effect is dynamic. Evidences in tiffs paper indicate that RMB exchange rate movement has a moderate effect on domestic price inflation in a significant nonlinear and dissymmetrical way. Furthermore, the effects are quite distinct during the appreciation and during the depreciation of RMB.