Stable Exchange Rate Policy Research

Tl1e collgue of Bretton WOods System incnd great i~arity' and disorder inintemational monetary system, in which the exchange rates satv a lOngrun and high volatilit}.The unstable exchangO rate, fluctUating internahonal trade by augmenting risk, resulted in a directimpact over macro-economy of one nation. on the Other hand, tl1e asl economy t'as alsoinfluenced indirectl3, for capital cannot be allocated rationall3 through banking System under suchan volatile exchange rate because of the deviant balance sheets of banks. How can we figure outthe reason fOr ti1e volahlity of exchangO rate and its ioduence oter an econom3? Hotv. can weexplain the mecl1altism Of stabilialng the exchange rate? Why different countrieS show differentanitudeS tOWards the stability ofexchangC rate? And hotv ca.l we facc the difficulhes in stabilizingure exchmp be? The edsting theq has bo gutl} chai~ by tbe melitytSince its open-up PraCcc, Chinese econonty enjOyS much closer relabonshiPS tvith that ofother countries, intenational trad and international mpital has played a veq important role inbooshng China's economp The Chinese entry il1to WTO at the comnlencement of 2lth centun'means not olily a much closcr tie with the ttorld economy but also much morc complicatedtwl situallon tl1an befOre. The Opening-up and detelOPment Prwts of Chincse econo1n}'makes tl1e exchang rate of Reminbi a key and influential variable in the long run, whichconstitutes ilre sWance of the dissertation.Tl1e dissndhon highlights tl1e policy of stabilizing exchange rate, tvith main contents asfOllows,The first chaPter speifies dre researeh background. The author first reviews tl1e backgrOu11dOf intemationai monetary s3stem and argues that tl1e ctw one. feated in irreqularity' and in aninconsistel1t nAn ds the crisis, will still last for a long peiod. then b} defining tl1e economicterm, tl1e authOr POintS oul. inteffiational speCulation-orien.ed capital has being expanded sil1cel970S, and express new character of institution and derivation .in l990S.Tl1e second cl1apter ltighlights tl1e reason and the result of volatility in exchallge rate under anoPen econonty situation. First, after the anal}.sis ot+er the participants of exchangc lnarkct, theauU1or first argues that tire free flow of internatiot1al speculation-orientCd capital is the lnai11source of volatility' in exchange ratc. secondl}. tracil1g back the cvolution of tl1e cxchange ratctheOry, thirdl3', der discussing the fOrmation of knowledge, il1formation and exPectatiol1, tl1carticle emphasizes tl1e important role that ration pla}-s in tl1e volatility of exchange rate f at Iast. tl1eautl1or allalyses the ichuential nrechanism of \.olatile exchange rate in macro-ecollol11}' al1dsPeCifies the tralismission cl1annel in tCnns of inten1ationaI trade al1d bank..flle third chapter discusses olle of the ttx'o pril1ciple mecl1anisms of stabilizing exchal1gerate----capital control. First. tl1e article discusses capital colltrOl cthets in terms of tl1eon' al1dpositivism,secondl}, on the basis of cost-retenue a11alysis oter capital control, the author explainsWh' there are different altitudes tot'ards capital col1trol in differcl1t countries; At the el1d of tl1echapter, the author analyses the shortComings attacl1ed to tl1e fixcd exchange rate regil11e on tl1ebasis of capital control.The fourth chapter discusses the other principle mechanisl1l----lnarket tntertention l'ron1 tl1ecentral bank. First of all, this chapter discusses in dctails the l11ecl1anism of al1 unsterlizcd foreigl1exchal1ge intervention by' the ccl1tral bank in resPCcts of the situatiol1 change of fil1ancial bcl1eIits-portfolio ethets al1d cxpected i11flucl1ces(thcn tI1c autl1or introduccs the rcasol1s and l11cthods ol' aIsteriliZCd fOreign exchange intervention by the cc11tral bank a11d discusses its effects in a openmarkct; finally tl1e author talks about some other interventiol1 to stabilize the exchange rate by thecen...