The Review Of International Currency Theory Base On The Search Model

The money plays an important role in our daily life, but the classic economic theory doesn't analyze and research it so deeply as its important role.The neoclassic economics'core is the Walras general equilibrium theory, and it separate the value theory and the monetary theory. It only analyze the equilibrium of the commodity economy, but neglect the money's existence and its necessity in the applied economics. In the general equilibrium theory, the money is just a charge unit, and don't play any role as the money in our daily life, and this is a big defect of the general equilibrium theory.The commodity has immanent value, because it can bring utility to the people who consume it. But money, especially we say the Fiat Money, doesn't has immanent value. So how can we understand the value of money, and how to intergrate the value theory and the monetary theory, this become the research direction of the economists.This paper will first introduce some monetary models, to realize the different methods to analyze the money's effect and value, these models include Overlapping Generations(OLG),Money-in-the-utility-function(MIU),Cash-in-advance constrain (CIA),Money-in-the-production-function(MIP), and to emphasize the Search Model, which is the main method to analyze the monetary theory in recently years. Compare to the early monetary theory, the Search Model become the mainstream of the methods to analyze the monetary theory. The early search theory is used in discussing employment and the price, Kiyotaki and Wright(1989) first introduce it to the monetary theory, they assume the random matching process betweent the different individuals, and analyze the individuals'decision to describe the search process in the transaction. The real transaction is diverse and random, so such model capture the real character of the transaction. It analyze when the individuals meet, they will make a transaction only when they all want the counterpart's own, what we say it double coincidence of wants. Through the analyze of search model, the money can alleviate the lack of double coincidence of wants, and the money come into being endogenous.The International Currency plays an important role in the international economic actions, it affects the whole world's economic stable and health. The local currency is protected by the law, so it can circulate in the entire economic. But the International Currency doesn't have such protection, we want to find how the International Currency can be accepted widely. When we begin to research, we will have many questions. What features of a country make it possible, or likely, for its currency to circulate internationally? How and when can local currencies survive in the presence of a universally accepted international currency? Why is the dollar become the mainly International Currency? What is the exchange between diffent Currency? This paper will introduce some method and conclusion in the research of International Currency by Search Model. The research direction is about the generation of International Currency,the competition of International Currency,the substitution of International Currency,and the exchange between International Currency.