I have series of US bilateral balance (BIBOT) of trade with China and series of real exchange rates (RER) of the Chinese currency. I have found that Chinese currency is undervalued and have estimated the values of the undervaluation.
I have also found that there is cointegrating relationship between BIBOT and RER, and that RER Granger-causes BIBOT. I have constructed VECM with the given series.
Now, I want to know what if RER were not that in reality but slightly revalued (using my estimated undervaluation figures) and what historical BIBOT figures would correspond to these hypothesized values?
As I understand this is counterfactual/simulation analysis? How can I do this using RATS?
Thank you!