A Study On The Mechanism Of Financial Friction On Economic Fluctuation

Economic growth has always been a national focus.Different countries because of the economic development of the initial stage and the growth rate of different,led to the same period of time between countries and countries,the economic development of the differences.So economic fluctuations had become the economic theory and macro-control concerns of the hot issues.In terms of our country,the main means of macroeconomic regulation and control are policy,laws and regulations and economic aspects.The monetary policy of policy is a more important means in our country.The channel of monetary policy is mainly composed of two aspects:one is the monetary channel;the second is the credit channel.In this regard,more research is focused on monetary channels.The economic fluctuations in credit channels are relatively small.In the study of economic volatility,the friction in the financial market gradually emerges with the development of economy.The existence of financial friction leads to the increase in the cost of financial markets,then through the financial markets and other sectors of the layers of amplification affect the real economic fluctuations.Therefore,it is necessary to study the effect of financial friction on the credit fluctuation in the credit market.This paper focuses on how financial frictions can affect the country's economic changes in the transmission channels of credit markets.In this paper,a DSGE model with financial friction characteristics is used,as described by Bernanke,Gertler and Gilchrist(1999),and calibrated using parametric values with different levels of financial friction.This model incorporates technical shocks,family preferences,and investment shocks.This paper hopes to make the model more fitting with the actual economic data by adding shocks.The results show that China's macroeconomic variables are affected by the asymmetric information of the credit market.Such as output,investment and other economic variables have shown a greater volatility.The data for this paper are from the first quarter of 1996 to the fourth quarter of 2016.Four macroeconomic variables were selected,and parametric calibration was used for the estimation of the parameters.The parameter calibration part focuses on the Bayesian estimation method to analyze the model.At the end of the paper,we used the impulse response function to measure the effect of a single impact on the selected variable.Empirical studies show that the financial friction in the credit market affects China's macroeconomic variables.In the output,investment,inflation and other data under the premise of observation,through the a priori distribution of its parameters assigned.In the analysis of the impulse response method,it is concluded that the existence of financial friction leads to the increase of the cost of the economic subject in the credit market.The effect of the exogenous shock makes the economic fluctuation be magnified and transmitted to the various departments through the financial market.The results of variance analysis show that the contribution of financial shock to output is obviously reduced with the increase of financial friction coefficient,but the financial shock has obvious long-term lag,and it will not get obvious effect in the short term.In addition,the short-term recovery of monetary policy,the nature of steady-state,makes the monetary policy has become China's economic means to ease the short-term fluctuations.