Influences of Exchange Rate Volatility on China's Export to Japan

This paper investigates the influence of exchange rate volatility on the real exports of China to Japan. The Johansen multivariate cointegration method is applied to study the long-term relationship between real export and exchange rate volatility. Granger non-causality test and impose response function method are applied to study the short-term relationship. This paper suggests that the real exchange rate volatility does not have a significant long-term impact on the real bilateral export for China and Japan. But in the short run, the volatility do have significant effect on the export.