Journal of Chemical and Pharmaceutical Research (ISSN : 0975-7384)

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Original Articles: 2014 Vol: 6 Issue: 5

Study on determinants of Chinese trade balance based on Bayesian VAR model

Abstract

With the appreciation and fluctuation of the RMB exchange rate, it is necessary to study the relationship between exchange rate, stock prices and the resulting impact on the trade balance. Three of them are forecasted using the Bayesian estimation method, further, it can be tested that appreciation of the RMB drive the stock prices up. While the stock price and RMB exchange rate change on the trade balance contribution is not obvious. On the other hand, Consumption has significant effect on Trade balance, becoming the main reason of its surplus.