2005 Fiscal Year Final Research Report Summary
Study into the Dynamism and Fluctuational Factors of Foreign Exchange Rates
| Project/Area Number |
15530225
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| Research Category |
Grant-in-Aid for Scientific Research (C)
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| Allocation Type | Single-year Grants |
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| Section | 一般 |
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| Research Field |
Public finance/Monetary economics
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| Research Institution | Kogakuin University |
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Principal Investigator |
YOSHIDA Ken-ichi Kogakuin University, Department of Engineering, Associate Professor, 工学部, 助教授 (10230731)
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| Co-Investigator(Kenkyū-buntansha) |
YOSHIDA Ken-ichi Kogakuin University, Department of Engineering, Associate Professor (10230731)
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| Project Period (FY) |
2003 – 2005
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| Keywords | Plaza Accord / nominal fluctuations of foreign exchanges / hot momey / inflation / flexible (exchange) rate system / fixed (exchnage) rate system / international migration of capital / real fluctuations of foreign exchanges |
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| Research Abstract |
There is no economic theory which explained "systematically" the whole change of a Japan-U.S. exchange rate in the 1980s, i.e., the dollar rise of the first half and the rapid dollar fall of the second half. Although there is the empirical research of "having restored to the exchange rate to the level of the start of the 80s in the end of the 80s" by calculation of an "effective real exchange rate", "why it became such" is not explained.
The purpose of this research was explaining conformably the Japan-U.S. exchange rate change of the 1980s, after verifying the long-term dynamic state of foreign exchange rate change based on two factors of exchange rate change, i.e., the "real" factor of change of international balance of payments and the "nominal" factor of change of price levels. For these three years, while performing collection of reference, listening comprehension by the persons concerned, etc., based on analysis of data etc., I explored the true state and essence of an exchange ra
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te and system, and acquired original knowledge from both sides of history and theory. The center of a result is the following.
Under the inflation which continues from the second half of the 1970s, naturally, the exchange rates for the dollar of the 80s should have fallen extensively to other currency. However, it went up by the inflow of foreign capital (large black figures of a capital balance) by dear money policy, and an unusual strong dollar was made to appear. Although it started to fall by the coordinated cut of each country based on the Plaza Accord, unexpectedly, the adverse current of foreign capital (capital flight) was not produced. The outflow of the foreign capital (reduction of the black figures or deficitizing of a capital balance) by release of a high interest rate cannot explain the weak dollar of the second half of the 80s. In fact, the problem is not at a U.S. foreign situation and suited internal conditions. While almost all domestic commodities raised a price under the basis of an inflation, only foreign currency was an exceptional low end product. A "strong dollar" means a "weak other currency rate". The dollar nailed at the "monetary market" by dear money policy flowed into the "exchange market" as a low end product market like raging billows by release. Buying foreign currency with a dollar raises the exchange rate as a price of foreign currency. The sharp fall of the dollar was purely generated according to the internal factor.
Although a policy can distort a law, it is not canceled. A law is transferred to somewhere else with the different form. A policy is obliged to an alteration and restoration after all with objective economic conditions. Less
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Research Products
(15 results)
