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The Opening Up Of Financial Markets, Interest Rates - The Exchange Rate Linkage

Posted on:2004-11-22Degree:DoctorType:Dissertation
Country:ChinaCandidate:H L XueFull Text:PDF
GTID:1116360092985549Subject:Political economy
Abstract/Summary:PDF Full Text Request
The inflow and outflow of capital is restrained, though China has achieved part opening of capital account. And exchange rate regime shows as single-pegged dollar (exchange rate) regime, and interest rate is still restricted. Therefore, the mutual influences between interest rate and exchange rate is not strong. China will open her financial market and achieve free float of exchange rate and interest liberalization with the quickened integration of international economy and the entry to WTO. On the one hand, it means the mutual influences between interest rate and exchange rate will be strengthened further; on the other hand, it shows China will inevitably be attacked by external risk shock. Accordingly, we should take preventive measures, and steadily propel the course of opening, and reform and open financial market so as to absorb shocks by profundity and extent of financial market, and build defending system of "interest rate and exchange rate" to prevent shocks and etc. And financial crisis may be kept within its limits by all mentioned above.Combining with Chinese realities, by using modern economic analytical tools, starting from discussing linkage mechanism between interest rate and exchange rate, author tries to establish a framework to analyze the linkage between interest rate and exchange rate in dynamic opening financial market, and tries to study the financial-market opening model, interest-liberalization model, exchange-rate reform model which adapt to China, thus putting forward a systematic defending, an early warning and a regulating mechanism from a fresh perspective against the new issue-risk shock which occurred during the course of financial-market opening after China's entry to WTO so as to offer an integrated thought for keeping internal and external balance of economic development in the course of Chinese financial opening. In a word, author tries to study the issue from the following aspects:(1) To structure theoretic model which adapts to analyzing Chinese reality through multi-perspectivs to discuss linkage mechanism between interest rate and exchange rate.(2) To construct theoretic hypothesis adapting to financial-market opening in China.(3) To discuss the model of dynamic interest-rate-liberalization accorded with the model of financial-market opening in China.(4) To probe into the optimum target of exchange rate regime accorded with the model of financial-market opening in China.(5) To put forward the risk-control-system which prevents and cushions the risk shocks and keeps the internal and external of Chinese economy balance under the condition of opening economy by discussing linkage between interest rate and exchange rate.Author gives a brief analysis of the realistic background studied in the paper first. Author makes clear about the issue that he tries to solve in the paper with pointing out the cry for systematic theoretic study of the financial-market-opening practices. Then, through the systematic review on the existing linkage theory between interest rate and exchange rate and the gross generalization on the status of domestic research, author thinks the existing theoretic supply cannot satisfy the cry for theoretic demand. Thereby, taking it as a start, author makes clear about the academic structure of the paper.The present theoretic study does not delineate a complete outline on linkage mechanism between interest rate and exchange rate, therefore there exist always ex parte predicaments on analyzing the problem of interest rate-exchange rate in reality. The first part is the second chapter. In this part, from four different perspectives that are general analysis, model of interest rate parity, Mundell-Fleming model, and policy-target of central bank, author carries out a thorough analysis on linkage mechanism between interest rate and exchange rate, and typically selects some countries or regions to do the practical research on linkage case between interest rate and exchange rate. Hereon, author sets up the general analyzing framework on linka...
Keywords/Search Tags:Financial Market, Dynamic Opening, Interest Rate, Exchange Rate, Linkage Mechanism, Interest Rate Parity, Risk Shock
PDF Full Text Request
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