Research on the Relationship between the Exchange Rate and the Trade Surplus under the Background of Inter-product Division and Trade——Analysis and Development of the Application of Marshall-Lerner Condition

Together with the RMB appreciates continuously,the trade surplus between China and U.S.A is still becoming larger,which challenges the traditional international finance theory.On the basis of this,this paper studies the problem from the perspective of the intra-product division and trade.The paper establishes the comparative static model to analyze the relationship between exchange rate and trade balance,and gives an example and regression equation to analyze empirically by using of the related data of China-U.S.A in 2004-2006.The conclusion is that the application of Marshall-Lerner condition will change and it should be modified,and the sensitivity of the trade balance to the fluctuation of exchange rate will decline.At the same time,because the degree of intra-production division and trade is different in various industry,the degree of sensitivity decline for the trade balance to the fluctuation of the exchange rate is different,which has some policy implication for our country.