Part 1 Research Project Background
Affected by the Federal Reserve’s interest rate hike, the Japanese yen hit a 34 year low against the US dollar, sparking heated discussions.
However, some economists and financial experts have biases when analyzing this issue: they believe that raising interest rates by the Federal Reserve will only benefit the United States, not harm it; For Asian countries, the opposite is true.
Part 2 Research Content and Challenges Faced
The main contents of the research include：
This article is guided by economic theory to refute the aforementioned biases, and on this basis, seeks to identify the causes and solutions to the financial crisis.
Challenges faced by research:
The economic models involved in this article are all aimed at analyzing the equilibrium products, currencies, and foreign exchange markets in the short term (1-2 years). Not suitable for medium to long-term market analysis.
Part III Research Results and Benefits to Society
Research results:
This article analyzes the opportunities and challenges brought by the Federal Reserve’s interest rate hike to the United States, Japan, and Vietnam through the IS-LM and DD-AA models of product, currency, and foreign exchange markets. Further analysis was conducted on the factors that caused the financial crisis, as well as the response measures that governments of various countries should adopt.
The US product and currency markets are shown in the following figure:
The US foreign exchange market is shown in the following figure:
The potential impact of research findings on society:
1. Consider the factors that caused the financial crisis:
4 external and 4 internal factors each;
2. Seeking countermeasures: 4 countermeasures.
Part IV: Research Triggering Other Projects
Studied China’s performance in this crisis, the advantages and disadvantages of its foreign exchange management mechanism, and suggestions for improvement.
KRIRK UNIVERSITY
The Department of Business Administration
Jia, Shigang
