The Theory Of Purchasing Power Parity In An International Finance Experiment

It is exchange rate which links internantional finance and internantional commodity market together.With the development of international trade,exchange rate changes all the time,and the relating commodity market and capital market change greatly too.The polititions of the nations urgently need appropriate exchage rate determinational theory to lead the micro economic policy to the right way.In the midtime of 1980's,the research experience of exchange rate trends after the breaking of Bretton Woods System implies that PPP(Purchasing Power parity) is unfit for the most currency,which make PPP theory very undesied than berore to the academia.However,in the 1990's,with the development of the economics and specimen data increasing,the western economics acadamia were interested in spending more time on the applicable research of PPP theory.Meantime,what they have researched breaked through the traditional PPP theory,and the viewpoint of which have passed the negative side to the positive side.This article attempts to use experimental economics as a new tool to develop the experiment in China after the background of international finance market,which use the money as the prompting way and use Chinese undergraduate as testee.Two modles are considered,autarky and competition which are based on the foreign experiments.It is clear that the PPP theory is correct in the long time which can be regarded as equibrium long-time standard,however,incorrect in the short time.Meanwhile,we discuss experitmenal economics and the results of this experiment in the future application of international trade after analyzing the experiment data.The successful experiments of this paper supply and accumulate some experiences for the future ones in China which are of such significance as the aspects of designing,methods,data processing and so on.