Empirical analysis on the dynamic system of dollar-euro exchange rate — A redesigned method based on the nonlinear dynamic systems

Abstract

The new method has been taken to describe the dynamic system of U.S. dollar-euro exchange rate and the monetary and credit policy of the Federal Reserve and European Central Bank. The Grove Tubman -Hartman Theorem has been applied to redesign the system of nonlinear differential equations, with data in two periods: The law of relationship changes between exchange rate and interest rates has been modeled. The empirical results show that the dynamics of these changes may have seven systems; this is based on the complex structure of the financial system. Research methods used can be applied for the development of program structure and prediction purposes of the international financial systeml.