Financial Stability and Monetary Policy Rule——A Simulation Based on the Impact of SMBs Survival Rate
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| Title | Financial Stability and Monetary Policy Rule——A Simulation Based on the Impact of SMBs Survival Rate
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| Author | He Cong and Chen Yixi |
| Organization | Hangzhou Provincial Capital Sub-Branch, People’s Bank of China |
| Email | hecong1995@sohu.com;yixichen@139.com |
| Key Words | Monetary Policy Rule; Financial Stability; SMBs Survival Rate; Dynamic Stochastic General Equilibrium |
| Abstract | This paper extends the standard dynamic stochastic general model by using SMBs (Small and Micro businesses) survival rate as the indicator of financial stability. To this end, the model compares the effect of policies between traditional Taylor rule and the SMEs survival rate concerned rule, when encountering a significantly decreased of SMBs survival rate. The result shows that, the new augmented rule could smooth the output and ease the deflation more effectively than traditional Taylor rule. On the other hand, it may expand the amplitude of asset price. |
| Serial Number | WP471 |
| Time | 2013-06-26 |
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