Abstract: On the basis of the construction of a multi-variable production function model containing both inside and outside production under the open economic conditions, and making use of the provincial panel data from 1994 to 2008, this paper conducts an empirical test of the impact of the real Renminbi (RMB) exchange rate changes on China’s actual output and the regional differences of this effect. The results show that the elasticity coefficient of real output to RMB real efficient exchange rate (REER) is -0.179, implying that the appreciation of RMB is to the disadvantages of China’s output growth. In the meantime, the elasticity coefficients of the real output in the four economic regions, eastern, central, western and northeastern China, are -0.280, -0.080, -0.339 and -0.115 respectively. This signifies that the appreciation of RMB can bring unfavorable impacts on the actual output of all the four regions, but with significant difference. And RMB appreciation will further widen the economic gap between the eastern China and western China.

Key words: RMB exchange rate; real output; regional differences; panel data model