China’s Economic Fluctuation Analysis Based On The Sticky

Understanding the source of economic fluctuation is a core of macroeconomic. TheNew Keynesian think that nominal imperfect for understanding the volatility of theaggregate activity is essential,then it must have great effect on macroeconomic activity inthe form of a small friction in micro level. In this paper, we consider sticky informationfactor for understanding China’s economic volatility.Sticky information refer to the economic agents incur economic cost in the collection,understanding and absorb information process,which caused the economic agentsinfrequently update information.Weighing the cost of the updated information and thelosses of using lagged information, the economic agents will update information inrandom time interval. Then, the sticky information on micro agents decision has certaininfluence: the economic agents decide economic variables like a Fisher style pricing settingrule, namely the agents redesign the variables of future sequence when the information isupdated.Taking into account special information dissemination mechanism of China,state-owned enterprises are in a dominant position in the national economy, and thegovernment and the state-owned enterprises still exist a certain degree of correlation, whichmakes the state-owned enterprises in the processing of information,including the country’sindustrial policy, monetary policy and fiscal policy has a great advantage. Thus, relative tothe SMEs, the state-owned enterprises to update the information for decision-making faster.In addition, household consumers to collect,organize, and understand the informationconcerning the national policy, there is a higher opportunity cost, which makes consumersmay update the information set the time interval longer. Therefore, China’s state-ownedenterprises, small and medium-sized enterprises, family updated information set rate indescending order.Through consideration of the economic decision-making mechanisms of representativemicro-economic agents in the sticky conditions, in the paper we build the New KeynesianDSGE model.By decision-making of the family so as to maximize the lifetime utility inthe inter-temporal constraints, we obtain the Euler equation in sticky information condition, and the total demand IS curve:In addition, by considering the decision-making of the firm in monopolistic competition conditions, we obtain the overall price level in sticky information economy, and the total supply of the Phillips curve:Furthermore, monetary policy is introduced by the Taylor rule, and considering the exogenous technology and the interest rate shock, we establish a complete description of the structural equation in the sticky-information economy system.By calibration method, we consider the impulse response and contrast horizontal correlation coefficients of various macroeconomic variables to the actual data, and evaluate model.By simulation, we obtain the following conclusions:(1) From the qualitative point of view,the model can be well when the economic system is subjected to external shocks, the magnitude of deviation from the equilibrium level of the main economic variables over time form a hump-shaped; relative to changes in the output, changes in response to the inflation rate is lagging behind.(2) From the quantitative point of view, the sticky information model for China’s economic could performance well in the aspects of persistence and co-movement of actual data of China,but not in the variation of the data. So the model needs more revised.