Interest Rate Liberalization, Exchange Rate Reform and International Capital Flow
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| Title | Interest Rate Liberalization, Exchange Rate Reform and International Capital Flow
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| Author | Chen Chuanglian and Yao Shujie |
| Organization | East China Normal University;Chongqing University |
| Email | Shujie.Yao@nottingham.ac.uk |
| Key Words | Interest Rate Liberalization; Exchange Rate Reform; International Capital Flow; Capital Account Liberalization; TVP-VAR-SV |
| Abstract | As the speeding up of market-oriented interest rate reform, exchange rate system reform and capital account liberalization, the Chinese financial market faces an unprecedented challenge. This paper constructs a micro-foundation model of international capital flow to analyze the nonlinear and interactional relationship among interest rates, exchange rates and international capital flows. We then use the TVP-VAR-SV model to empirically exam their dynamic relationship. We also analyze the effects of market-oriented interest rate reform, exchange rate system reform and capital account liberalization on interest rate, exchange rate fluctuations and international capital flows. Finally, we put forwards some suggestions for three major financial policy reforms. |
| Serial Number | WP1095 |
| Time | 2016-08-10 |
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