Exchange Rate Theory And Practice Of Research

This dissertation attempts to sort out and analyze the evolution and trend of exchange rate theory home and abroad from the angles of exchange rate decision and the choice of exchange rates regime and the levels of exchange rates, exchange rate theory and the RMB rate mechanisms of formation, and tentatively demonstrates the assumption against the problems we are facing in RMB exchange rate to construct the"two in one"model of RMB exchange rate, that is, a long acting mechanism including the reasonable level of RMB equilibrium rate of exchange, the acceptable choice of RMB exchange rate regime, and the RMB exchange rate formation. It holds that the"two in one"model, as the direction of RMB reform in the future, is not only in accordance with the theoretical logic of the evolution of exchange rates but also with the practical logic of the economic and social development of our country.This dissertation comprises six chapters. Its focuses are mainly made up of Marxist exchange rate theory, western exchange rate theory, and RMB exchange rate theory. Its research methodologies are as follows: combining macro-analysis with micro-analysis while giving priority to macro-analysis; combining equilibrium analysis with non-equilibrium analysis while giving priority to equilibrium analysis; combining mathematical analysis with philosophical analysis while giving priority to mathematical analysis; combining logic analysis with historical analysis while giving priority to logic analysis; combining positive analysis with normative analysis while giving priority to positive analysis; combining dynamic analysis with static analysis while giving priority to dynamic analysis.As this dissertation holds, Marx is the primary representative of exchange rate theory and Marxist labor theory of value is the solid foundation of exchange rate theory. Marx holds that exchange rate is formally the price of money of a country denoted by the price of money of another country but essentially the exchange ratio of the quantity of value represented by or contained in the currencies of the two countries, so exchange rate is necessarily the outcome of the historical development of international exchange of commodities and its intrinsic contradictions, and the"typical process"of the change in exchange rate is the process that the actual exchange rate fluctuates around the par value of the value of money. Marx stresses not only the influence of domestic labor value but also the influence of international labor value on exchange rates. From the perspective of exchange rates, the regulation of the law of value extends from one country to the world. Marx thus keenly points out all the defects of the international credit system under the gold standard system, holds that"real crises always follow the change of exchange rates", and agrees that"exchange rates are the weather glass of the international movement of currency metals". However, Marxist exchange rate theory is restricted by the gold standard system in his times, because positive study shows that we can't copy those exchange rate regulating theories reasonable for the gold standard system to the exchange rate system without gold reserve, and we should review the attributes of commodity prices that affect exchange rates when we review the attributes of currency value that affect exchange rates.This dissertation reviews and evaluates the evolution and development process of the theories of exchange rate decision and exchange rate selection.In the aspect of exchange rate decision, it mainly introduces and elaborates on the theory of international indebtedness, the theory of exchange rate psychology, the theory of purchasing power parity, the theory of interest rate parity, the portfolio theory, the theory of equilibrium rate of exchange, and the chaos theory of exchange rate decision; in the aspect of the exchange rate regime, it mainly introduces and explains the exchange rate regime under the gold standard system, the exchange rate regime under Bretton Woods Monetary System, and the exchange rate regime under JamaicaMonetary System; in the aspect of the theory of selection of exchange rate regime, it mainly introduces and explains the bipolar theory of exchange rate, the theory of optimum currency area, the theory of economic structure, the theory of Nominal Anchor, the theory of"original sin", the theory of"fear floating", and the theory of"the disappearance of the vanishing intermediate regime". With the analysis and comparisons, this dissertation holds that, irrespective of any aspect, each of these exchange rate theories has its unique content and form. For example, the theory of exchange rate decision experiences"three"transitions, namely, from giving priority to macro-analysis to micro-analysis, from giving priority to stock factor analysis to flow factor analysis, and from giving priority to real economy to virtual economy. As for the theory of selection of the exchange rate regime, it also has experienced"three"transitions, namely, from convergence to fixed exchange rate system to independent system of floatation, from selection of optimum currency area to the target area of exchange rate, and from seeking of single policy object to multiple policy objects. Although each theory of exchange rate has its own features, any country"can not ever know the correct exchange rate", and there is no exchange rate regime that can be applied universally, namely, there is no best exchange rate regime.Finally, this dissertation reviews and evaluates the evolution and development process of the mechanism of the formation of RMB rate from the aspect of economic system. Under the planned economy system, economic management is replaced by administration and economic operation by political operation, which will easily make economic operation deviate from reality, thus we can't determine the equilibrium level of RMB rate in accordance with general exchange theories, and such non-economic long-term stability of RMB rate will become dependent on the long-term political stability. So, the long-term stability of RMB rate is a choice of necessity even if it has many defects. Under the market economic system, especially in the past two decades, RMB rate has gradually exhibited its defects that are the mismatching in the evaluation of RMB rate, the missetting in the level of RMB equilibrium rate of exchange, and the dislocation in the arrangement of RMB rate system. Given the defects of the mechanism of the formation of RMB rate, this dissertation puts forth a long acting mechanism for the construction of RMB rate, and puts forward a"two in one"model for the development of RMB rate. In the aspect of RMB rate decision, this dissertation, in accordance with the Marxist theory that the essence of exchange rate is the ratio owned by (under metal currencies) or represented by (under paper currencies) the currencies of two countries and in line with the quantitative methods of money value, constructs a model for the reasonable decisive RMB equilibrium rate of exchange. In the aspect of the selection of RMB rate system, this dissertation magnifies the function of"Mundell Triangle"and constructs an"elastic triangle"model in line with Krugman's way of thought in"Mundell Triangle"and"pendulum effect"under the condition of the target area of exchange rate. The so called"elastic triangle"model fully integrates"the independence of monetary policy, the free movement of capital, and the stability of exchange rate"on basis of Krugman's"pendulum effect"to promote the harmony between exchange rate policy and economic policy and their accord development."Elastic triangle"model can effectively overcome the defects in the theory of bipolar exchange rate regime and"the theory of the vanishing intermediate regime". It owns both the mobility of floating rate and the stable target area of exchange rate of the fixed rate of exchange, gives priority to both the independence and effectiveness of monetary policy, and can isolate the repellent impact of the capital flows while generate package effect in policy matching.This dissertation concludes that: the reform of RMB exchange rate should be guided by the scientific concept of development, should take foot in development under the general framework of the"two in one"model instead of being restricted by non-economic factors, namely, should establish a long acting mechanism for the sustainable development of the par value of the equilibrium of exchange, and should take foot in science instead of being governed by other interest groups and political wills, namely, should follow the intrinsic logic and objective law of the evolution of the mechanism of formation of the par value of the RMB equilibrium of exchange to transform systems to benefit the path selection of the acceptable RMB rate system. So and so only can the floating exchange rate system under supervision come into being, the sustainable development of the par value of RMB rate be truly realized, and the internationalization of RMB to become a world currency be effectively boosted.The study of this dissertation makes the following contributions:⑴It elaborates on the evolution of Marxist theory of exchange rate and the theory of western exchange rate in detail and makes some relevant classifications and comments from the angles of value and price; ⑵It constructs a model for the reasonable decisive RMB equilibrium rate of exchange and makes some theoretical deductions according to value theory and with reference to price theories;⑶On basis of the studies by the predecessors, it reflects the proposition of"Mundell's impossible triangle"and puts forward the assumption to construct"elastic triangle"model, and especially in the aspect of the independence of monetary policy, it advocates the efficiency analysis which gives priority to monetary policy;⑷It holds that, in order to resolve new"Triffin Poser", RMB gold content has no any practical meaning when we analyses RMB value basis, but gold reserve and the resource type of strategic material reserve has become increasingly important;⑸It holds that, in the implementation of policies, we should not only exercise multiple management by objectives for the implementation of the exchange rate policies of intermediate duration, but also change our attitude from referring to a basket of currencies to giving priority to the basket of currencies while stressing the importance of key currencies, and exert the functions of reduction and stabilization of the basket of currencies to enhance greatly the relative stability of RMB rate.