New Geopolinomic Frame: Modeling And Simulation

With the integration of global economy, the economic link among countries becomes more and more inseparable as well as the interaction, both of which contribute to the spread of financial crisis. The American financial crisis begins at 2008 shakes the whole world. Obviously, financial crisis assaults countries in various degrees which in turn affect the world's political and economic patterns.In order to be ready for challenges from Geopolinomic, we have to understand the essence of financial crisis and its transmission mechanism, moreover, the grasp of the operation rules of new Geopolinomic is also indispensable. A new Geopolinomical frame is set up by this paper:there are three region types, namely financial centralized region, resources centralized region and manufacturing centralized region, shortly financial countries, resources countries and manufacturing countries. This paper simulates the occurrence of financial crisis and learns about its transmission mechanism by the construction of corresponding model system. Besides, tariff and exchange rate—important game tool when talking about Geopolinomic--are also considered. This paper is a useful reference for China to enact its strategy in facing up to financial crisis and take the initiative in the new Geopolinomical games.This paper is divided into 6 sections.The first part is introduction. This paper started at evolution of Geopolinomic, analyzed the correlation of financial crisis and Geopolinomic, strengthened the importance of the new frame and discussed how the two important tools—tariff and exchange rate—contribute to Geopolinomic games. Reviewing of literatures referred to tariff, exchange rate and economic growth, one country study cannot clarify the mechanism of tariff and exchange rate under complex global economic links and provide an overview of international Geopolinomic. Besides, the tariff custom union under game theory lacks in economic dynamics. A new model is in urgent need. The new economics geography comes up with a frame for multi-region modeling while it lacks in economics dynamics which can be supplemented by General Equilibrium Theory. These are the reasons why this paper brings in economics dynamics model based on the General Equilibrium Theory. The second paragraph specified the construction of modeling and its analysis system. The three-country economics growth modeling in this paper is following NEG as well as extending two countries to three countries based on the study of Pfluger(2004) and Yamamoto(2008) and bringing in tariff and exchange rate. In order to present the three-type-country frame, the manufacturing functions were expanded to a three elements CES production functions. Moving forward, this paper combined NEG with General Equilibrium Theory and added government function to make up dynamics modeling in financial crisis. Based on the model, a computer system is constructed using C# and Matlab. As for the kernel, this paper used Matlab platform; to the interface, C# is used. After all, this paper simulated financial crisis successfully.The third part simulates the fluctuation of exchange rate's influence on countries. As long as we concern, the employment rate will increase when a country takes part in devaluation no matter what type it belongs to. On the other side, the participation of other countries weakens the former's employment increment while the ones failing participation see the growth in employment whose result is influenced by the amount of participation countries. Besides, the financial centralized countries observe a relatively less impact of devaluation on their employment rate; the manufacturing centralized countries would be heavily affected by the devaluation while resource centralized countries are much sensitive to it register as the vibrant in employment rate. Another point is that financial centralized countries have least influence on other countries considering the change of rate; as to manufacturing centralized countries which has a mid-level force in the reaction of other countries to its mutative rate experience a greatest impact on employment rate; after all resource centralized countries influenced other countries most on their response to employment rate. To put it frankly, given employment rate, manufacturing centralized countries play a most important role while resource centralized countries are easily disturbed by others, besides, we do not see much can the financial centralized countries do. In addition, regulation of exchange rate has two sides:devaluation brings in increase of employment and output while decreasing annual consumption domestic; rise in value causes decrease in employment and output while increasing consumption.In the fourth section, this paper dealt with the impact on Economics of different countries caused by tariff. The result was no improvements observed by increasing others ' tariff while worsen others' employment situation. Every country prefers retaliatory tariff for its probability of lessening the financial harm caused by others. Increasing tariff unilaterally could initiate chain reaction of retaliatory tariff which results from diffuse of trade protectionism. Besides, in tariff games, financial centralized countries represent strong voice and only the cooperation of manufacturing centralized countries and resource centralized countries can make sense; manufacturing centralized countries cannot counterbalance financial centralized countries while they have advantages than resource centralized countries; resource centralized countries are the disadvantaged group only relying on the collaboration of others can them hold on economy interests.Last but not the least, this paper simulated a financial crisis. With the continuing overdraw of financial credit in financial centralized countries, their consuming capacity slide downward to a large extent and financial crisis occurs. Political games on exchange rate and tariff cannot better economics and improve citizens'consuming capacity by the root. The core power of eliminating crisis is to expand demand and strengthen consuming capacity domestic. Besides, resources influence economic growth. The heavier the restrictions are, the slower of countries' economic growth is, especially the manufacturing ones. At the meantime, the risks forcing on manufacturing countries by financial countries become bigger with the severe restriction of resources. On the other hand, the interfere of resources prices, which means the decrease of manufacturing countries'and financial countries' imported resources' price level, would further retard all countries economic development and fluctuate their employment, output and consume level which result in a faster approach of financial crisis.Be worth mentioning, as for the compel to appreciation of RMB exchange rate around Occident, this paper using manufacturing centralized countries'constrained increase of exchange rate scenario to simulate a crisis. Due to the exchange rate influence, manufacturing countries' decrease in employment is less than that caused by rise in value when financial crisis happens while has the opposite impact on annual consumption. In a word, the increase in its exchange rate would ameliorate economy situation in financial centralized countries and resource centralized countries with the harm forced down manufacturing centralized countries. Faced up to it, the manufacturing centralized countries'governments should enlarge their supply of public product and improve citizens'consuming capacity by transfer payment such as allowance to let the damage down.