Why RMB Appreciation and China’s Trade Surplus Expansion HaveCoexisted for A Long Time?——An Analysis Based on the Sunk Costs-Model Considering the Way of the Trade
YE Fang1, DU Chao-yun2
(1.Department of Finance, Huaqiao University, Quanzhou 362021,China; 2.Department of Finance, Xiamen University, Xiamen 361005, China)
Abstract：
From the perspective of the supply, considering the sunk costs of the firm and the special situation of China's trade, the paper makes a model learned from the two sunk costs-models proposed by Dixit. It also introduces the variables that describe the way of the trade in the model. Then an exchange rate band of no change is derived to explain why there is no decrease but increase in China's trade surplus while the RMB appreciates .The results show that reducing the company's sunk costs, changing the way of trade and adding the value of products to increase the sensitivity of trade to the exchange rate, rather than to emphasize the appreciation of the RMB, are important to reduce the current trade surplus.
YE Fang, DU Chao-yun.Why RMB Appreciation and China’s Trade Surplus Expansion HaveCoexisted for A Long Time?——An Analysis Based on the Sunk Costs-Model Considering the Way of the Trade[J] Economic Survey, 2015,V31(4): 43-48
2015 
