Currency Fluctuations And The Structure Of International Capital Flow

The purpose of the thesis is to construct a theoretical model and to do the empirical analysis so as to determine the difference between the impact of the exchange rate fluctuation on FDI and FPI flows and the relationship between the comp of international capital flow. Also, we use the theoretical and empirical results on the Chinese circumstances, where there will be release of regulation on free capital flows and currency fluctuations.The paper is arranged as follows. The first part is the introduction. This section describes the background, significance and methods of the thesis, and the innovative of this research. In the second part, we will review previous documents in related fields of our research, which includes the theory of comp of international capital flows and the theory on the relationship between the exchange fluctuations and international capital flows. By reviewing those papers, we find the area where we can expand the theory of international capital flows. In the third part, we choose the industrial organization approach to construct the model and analyze the impact of asymmetric information. We put this impact into our analysis framework to find that, through the channel of information asymmetry, the volatility of currency rate do affect the structure of international capital flows. In the fourth part, we use the multi-country panel data and PCSE estimate the results of the model, we found that the level of exchange rate have little impact on the comp of international capital flows and exchange rate fluctuations do affect the structure of capital flows and this effect is stronger as opacity rises. In the fifth part, using the previous conclusion, we analyze the problem faced with China Economy, when the authorities release the regulation on capital items and the freedom of currency fluctuations. To solve those problems, we bring about some short-term and long-term recommendations of policies.