Analysis On The Relationship Between The Choice Of Foreign Exchange Regime And Microeconomic Performance Under Open Economic Circumstance

Exchange rate is the ratio of a country's currency to another's,which is quite important in the running of a country's macro economy.Exchange rate can reflect a country's macroeconomic situation from various aspects,and at the same time,as an intermediate target of the monetary policy,exchange rate is also quite important in regulating macro economy and realizing the ultimate objectives.This paper,from the aspect of the mechanism of exchange rate formulation,firstly introduces the historical generalization of the development of exchange rate in the international economy,and then analyse the main factors that impact the exchange rate formation and fluctuation to investigate the mutual relations between exchange rate regime and macro economy.The paper mainly contains three sections.Firstly,this paper,after reviewing a great deal of research and work of former researchers,analyses that,among that many kind of macroeconomic statistics,the relationship between inflation rate and economic growth rate and the exchange rate regime that a country chooses,and then on the basis of Swan Model,this paper argues about the conflict of inner balance and outer balance of a country's macro economy,and analyses the combinations of exchange rate policy and monetary policy under the circumstance of conflict between inner balance and outer balance.Then this paper introduces the new vision of Swan Model upon the improvement of Rajan to refine the coordination of macroeconomic policies from a more comprehensive perspective.In addition,this paper chooses seventeen Asian and Pacific countries and regions(China's mainland,Brunei,Chile,Hong Kong of China,Indonesia,Japan,South Korea,Mexico,Malaysia,Peru,the Philippines,Russia,Singapore,Thailand,Viet Nam,Papua New Guinea and Taiwan of China),introduces these seventeen countries' and regions' exchange rate developmental and formational history,and in the end of this section,this paper,on the basis of the measurement model of Ghosh et al.,uses the data from 1980 to 2009 of the above-mentioned countries and regions to conduct an empirical study,and the result shows that under the pegged exchange rate regime,a country's inflation rate can be relatively well-inhibited,but on the contrary,the pegged exchanged rate regime shows significantly negative correlation with economic growth rate.The result is in accordance with the empirical study result of Levy-Yeyati and Sturzenegger.Finally,on the basis of the above-mentioned analyses and discussions and combined with the development historical economic theories and experience summery,this paper analyses the questions related to the inner and outer economic imbalance in China,and upon the basis of theoretical analysis of Swan model,proposes the applicability and limitation of China's policy-combination and the root of the conflict between Renminbi and foreign currency regime and policy.In the end,this paper sheds a light on the proposition of the reform and development of China's exchange rate regime and monetary policy upon the experiences of the above four countries and regions in exchange rate reform and regulation.