The Gambling Analysis Of Japanese Yen Exchange Intervention By Japanese Government

Because foreign exchange market is ineffective as well as the important status of exchange rate in the international economy, the universal viewpoint at present is that countries carry on the intervention to the exchange rate are reasonable and essential. The intervention methods to the exchange rate are on the whole consistent, but according to the national condition, the preference to the method is different. The methods mainly include the direct intervention way such as spot transaction, forward transaction and repurchase agreement of the foreign exchange business, affecting the supply-demand relation of the exchange rate and indirect intervention way changing the money supply then exchange rate through the monetary policy or other official intervention way and so on. Japanese government has received attention in exchange rate intervention aspect. Its foreign exchange direct intervention started from the 1990s, then enlarged the scale gradually, after entering the new century became increasingly fierce, but stopped in March,2004, even if in November,2009, Japanese Yen was in a critical situation, also has not restored the exchange intervention. This indicated that the exchange rate is no longer the tool which a country may control willfully, the benefit of it is complex and changeable, and there are gambling relations between various stakeholders. The game theory specializes in interdependent and interactional decision makers'rational policy-making behavior and the result of them, in order to achieve the game equilibrium by the gambling rules. This article has the purpose of studying the gambling relations between Japanese government and other stakeholders in the exchange rate question through the game theory which is widely used under modern economic condition, and then formulates the reasonable exchange rate policy.This article introduces the game theory involved at first, then reviews the history of Japanese exchange intervention and analyzes the effectiveness of its behavior from different angle. The result is that in the majority of cases intervention was ineffective, but there were obvious effects in a short time. Then, it analyzes the policy gambling between Japanese government and other governments, using complete information static game theory under the classical assumption which is widely used abroad. This method is using the index of economic growth and price index to establish utility function and response function, regards the foreign governments as a whole, so two economics gambling has be formed, then find the equilibrium. It explains that when the formulation of exchange rate policy conflicts mutually, they can set the scale of intervention beforehand according to this balanced solution, so as to achieve the win-win purpose. Under the relaxed conditions, complete information dynamic game theory is used, the cost and the income which Japanese government pays and obtains when it carries on the exchange rate intervention are listed, thus the payment functions of the two economics in each stage are obtained. Binary tree of game and strategic type indication method have been established, obtains four sub-gambling fining Nash equilibriums through the inequality relations under dissimilar conditions. Finally, in the study of the game between Japanese government and other foreign exchange market participants (such as the international speculators, the individual investors, etc.), first the analysis is under the assumption of "rational people", using the signal transmitting game, a special case of dynamic game. Japanese government and the public investors are main bodies of the game. It is thought that Japanese government has the policy superiority; public investors can only carry on the judgment according to its announcement. Government policy often needs public support to realize; therefore the confidence level of the policy is the key of this game. This article analyzes the confidence level of the information (expressed byαvalue) disclosed by Japanese government, obtains that the higher government's historical credit is, the quicker the recognition speed of the public to the policy goal change's of Bank of Japan, the higher the information accuracy disclosed, the higher the continuous level of the policy goal change, then the higher theαvalue is. And then "bounded rationality" which is thought to be more realistic is introduced to analyze the "herd behavior" and the evolutionary game, dividing the investors of exchange market into gambling side 1 and gambling side 2 at will, has carried on the evolved gambling analysis to the related interest relations, duplication equation is used, so three points of fixity are obtained in this game.The goal of the game theory is to enable all quarters that conflict each other to achieve all wins, so it is reasonable that utilizes the game theory to solute exchange rate problem under the economical internationalization background. The analysis of this article is established above a series of suppositions; the realistic problem must be more complex. The suppositions such as "complete information" and "rational person" is untenable, the research may revolve to solve such problem, to solve a more realistic problem, becomes to practical effective methodology.