Under The Perspective Of Financial Accelerator Output Effect Of Monetary Policy Impact Study

In recent years, the relation between monetary policy shocks and macro output hasbeen a hot issue in the academic field. However numerous attempts are more guidedby empirical and econometric methodologies, without the mathematical economicalmodels as a deduction basis, this paper is strictly consistent with the methodology ofpositive economics, not only introducing the financial accelerator effect as atheoretical basis, but also embedding such core mechanism into a dynamic stochasticgeneral equilibrium model (DSGE). Thus, it follows a strict way:“deduction-induction–assessment”, concerning both internal validity and external validity.By means of such method introduced above, a DSGE model with the view of financialaccelerator has performed very well in explaining the phenomenon of “small shocks,big fluctuations” of the Euro area.Specifically, this dissertation is divided into nine sections: Chapter I briefly describesthe definition of the background and significance of the main topic, the basic concepts,research methods, the creative parts and inadequacies. Chapter II is the literaturereview part, following the path of “Is there any output effect of monetary policyshocks?“,“What is the transmission mechanism?” and “How big it is?” Chapter IIfocuses on the popular tool for the analysis of macroeconomic fluctuations: dynamicstochastic general equilibrium (DSGE) model, including its characteristics and stepsof using: model construction, model solution, the estimation of parameters and policysimulation. Chapter IV introduced the development and status of the Economic andMonetary Union of the European Union, the characteristics of European Central Bank,and the monetary policy objectives and regulatory tools of European Central Bank.Chapter V applies the mathematical economics method to revealing the impact offinancial accelerator as the theoretical basis of the whole article. It could be alsoregarded as the transmission mechanism of monetary policy shocks. Chapter VIintroduces the euro area macroeconomic data sources: the AWM database as apreparation for the policy simulation of next chapter. Chapter VII embeds thefinancial accelerator theory into the dynamic stochastic general equilibrium (DSGE)system, mainly following BGG (1998) framework, and simulates the monetary policyshocks to analyze the output effects. Chapter VIII uses another tool: VAR model to evaluate output effects from the same monetary shocks as a comparative analysis.Chapter IX summarizes the whole dissertation and prospects.