Theory Of Exchange Rate Fluctuation

After the flexible exchange rate system performed in 1973, the question of exchange rate fluctuation has become the focus in the international finance. The exchange fluctuation involves many questions. The theory of exchange rate determination is the foundation of it. There have been many research results in exchange rate determination, including traditional theories and modern monetarist models. The exchange rate fluctuation has many effects on the economy. The analysis to such effects is quite valuable. The exchange rate fluctuation will of course relate to the exchange rate adjustment, which roots in economic policy or governmental intervention. To study exchange rate fluctuation, we should construct exchange rate forecasting model by econometrics techniques. Some forward research methods and models are helpful in this study. The systemic study to the exchange rate fluctuation is favor of the understanding to the change of foreign exchange market, and its impact to the economy.This paper takes the exchange rate fluctuation in the international finance as the main object of study, introducing and appraising various theories of the exchange rate determination, which have theoretical influence and practical significance heretofore in the field of international finance firstly. These theories include traditional exchange ratedetermination theories and modern monetarist models. Such theories and models provide the base of the analysis to the exchange rate fluctuation. This paper introduces two time-series models-ARMA model and ARCH model, which are adapt to the fluctuation forecast. I utilize the game theory and the chaos theory in the study of exchange rate fluctuation. I make the analysis to the effect of the fluctuation, including four parts. To understand the exchange adjustment, I use the IS-LM-FE model to analyze the adjustment effect by the different monetary policy and fiscal policy, still including the direct governmental intervention. At last, I compare the economy situation between present China and Japan several years ago. According to the lessons from Japan, I make some suggestions to the financial innovation in China.This paper roundly studies various questions about exchange rate fluctuation. It is quite consultable for China to understand and deal with the fluctuation in the international foreign exchange market, especially after China entering into WTO.Linxiangfa (Finance) Directed by Pro Wuhaihua and Pro Huyanjing...