Financial Accelerator, Expected News Shocks and Choice of Monetary Policy Rules

Abstract

Abstract: By constructing a DSGE model that includes financial accelerator mechanism and expected news shocks, this paper deduces the regulatory effect of the monetary policy rules of the scalar type, the price type and the mixed type on the macro economy, so as to explore the optimal monetary policy rules in the current economic environment. The results show that the model containing expected news shocks has a better fit to China's macroeconomic trends, which can better reflect the macroeconomic fluctuations under the financial accelerator mechanism. Compared with unexpected monetary policy shocks, the expected monetary policy shocks have stronger macro-control effects under different monetary policy rules. In addition, the welfare loss analysis shows that the mixed monetary policy rules can minimize the welfare loss caused by the implementation of the monetary policy, which means that the mixed monetary policy rules conform to the law of economic development, and that it is also the direction of China's future monetary policy development and transition.

Key words: financial accelerator, expected news shocks, monetary policy rules, financial friction, DSGE model

CLC Number:

F820
F830

JIN Xiang-yi, ZHANG Wen-fei. Financial Accelerator, Expected News Shocks and Choice of Monetary Policy Rules[J]. Contemporary Finance & Economics, 2022, 0(3): 66-77.

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