Exchange Rate Fluctuation Research Based On System Dynamics

The exchange rate has been the core issue of international finance and internationaltrade, and the exchange rate is one of the most important asset prices in an economy, notonly has the price of conversion functions, and also played a large role in the adjustment ofprices of production factors. Domestic prices and international prices of the commodityexchange rate fluctuations affect the relative prices of products in all countries, thusaffecting a country’s international competitiveness. Economic globalization increasing, thespillover effects of the economic crisis to further expand the case, to find a major factor inthe variable impact of exchange rate fluctuations, and provide strong support for China’seconomic decision-making, not only for the rich exchange of economic developmentsystems research paradigms and methods theoretical value, and to promote the sustainabledevelopment of China’s economic and social reality.Exchange rate and economic development system is highly complex, and an openeconomic system, has the characteristics of complex multi-level, non-linear, time lag. Inthe traditional theory, under the guidance of the research by means of research, science andcognitive constraints, a linear, reductionist method has been used in a long-term. With thecomplexity of system openness,the traditional theory of the exchange rate and economicdevelopment of the system of linear cognitive has been insufficient for the formulation ofexchange rate policy to provide full support of the theory, you need to seek new scientificmethods for this more in-depth research. Due to the exchange rate and economicdevelopment systems, complex, multiple feedback loop between the major variables, thussuitable for using the system dynamics and simulation techniques to study it. Therefore,the use of multiple feedback structure of the system dynamics method of exchange ofeconomic development system, the establishment of a system dynamics model of thesystem of exchange rates and economic development, and ultimately find the key variablesand control loop for the exchange rate policy formulation theoretical support.