EMPIRICAL ANALYSIS OF CORRELATION BETWEEN FOREIGN EXCHANGE FLUCTUATION AND PETROLEUM PRICE BASED ON BRAIN NEUROLOGY

Abstract

The brain neural network, a complex system of interconnected neurons, has been successfully applied in areas like oil price simulation. From the perspective of brain neurology, this paper aims to identify the correlation between foreign exchange fluctuation and the oil price. First, the author introduced the basic principle of brain neural network. On this basis, a positivism model was established to explore the correlation between the said two factors. The empirical data were analyzed through dollar index stability test and Granger causality test. The results show that the international oil price has long been fluctuating severely, especially after the 2008 global financial crisis; the dollar currency rate for oil valuation also changed constantly; there is a significantly negative relationship between the oil price and the US dollar index, i.e. the foreign exchange has a significant impact on oil price. The research results provide new insights into the relationship between exchange rate and oil price.