Research On Currency Flows Between Countries Based On Input-output Model

With the development of global economy, the connection between the countriesbecome closer increasingly, the connection between currency is becoming more andmore prominent. What is the relationship between country currency flows, currencyflows changes in one country will influence the changes of the currency quantity ofother countries, and this is a problem that is worth further researching. The input-outputmodel can well describe the internal contact of economic system quantitatively, and ithas a wide range of applications including the study of real object and value. There isgreat similarity between monetary flow and goods flow in the economic system, but theresearch results about the currency flows based on the Input-Output model is very few,This paper mainly researches the model application in currency flow between countries.The content include: Introduce traditional Leontief input-output model and analysisthe model application and development. Analysis the possibility that researchmultisectoral currency flows using input-output model from three aspects. And then,make detailed investigation about the constitution between national currencymovements; introduce the contact between countries and international financialinstitutions. Defines the exact meaning of currency inflows and outflows, classify all thecountries into ten sectors and establish the input-output table of currency flows betweenthe countries. We separate the loans and deposits respectively from the currency inflowsand outflows of every country, so as to make the model more meaningful, and then get aconverted input-output table: horizontal input-output table of currency flows andUnified vertical input-output table of currency flows. Under reasonable assumptions, weintroduced the concepts of direct inflow coefficient, direct outflow coefficient. Andanalysis the relationship between money flows and the international reserves, deduceand define complete inflow coefficient, and complete outflow coefficient, establish ahybrid input-output model.Finally, validate the model using the real data of currencyinflows and outflows between countries, Get some quantitative relationship between thechanges of currency flow and explain the economic significance of the quantitativerelationship. In practical applications, the model we established is meaningful.