The dollar index, the correlation between the dollar circulation and the dollar interest rate ——— Based on TVP-VAR, an empirical analysis of the modelr

Abstract

Dollar index, dollar interest rate, and dollar circulation are the three important indicators to study the change of the dollar exchange rate, and they have a close relationship among the three. The dollar interest rate is positively correlated with the dollar index. In general, the US interest rate falls and the dollar index weakens; the US interest rate rises and the dollar index prefers trends. While the dollar circulation shows a negative correlation with the DOLLAR index. If the dollar circulation increases and the dollar depreci, the DOLLAR index will be relatively reduced, which also means that a large amount of capital overflow to foreign countries. This paper will use the TVP-VAR model to explore the correlation between the DOLLAR index, dollar interest rate and dollar circulation from the perspective of empirical analysis, and analyze it based on the impulse response diagram, and finally make a summary of the empirical results, hoping to draw some scientific and valuable conclusions.