Analysis Of Financial Accelerator Effects Of A New Monetary Policy Rules

The paper is a study of financial accelerator effects of a new monetary policy rules.According to the references,some researches have used different models to learn how financial accelerator amplify the volatility of economy while different factors changed.However,there are less researches that study the effect of financial accelerator from the view of monetary policy which contains Financial Condition Index(FCI)and labor force participation rate.This paper takes FCI and labor force participation rate into Taylor rule,and take interest-rate smoothing into account,using TVAR model to test the effect of financial accelerator.The paper has two parts.The theory part introduces how to construct “New Monetary Policy Rules” of this paper.Firstly,I introduce the McCallum Rule and the original Taylor rule.Then I take Monetary Condition Index(MCI)which consider the factor of exchange rate,and FCI Index which contains the asset prices into Taylor rule.Janet L.Yellen became the Fed Chairman in 2014,who concentrate much on labor market conditions.So I summerised a so called “Yellen rule”,taking labor force participation rate into monetary policy rules.And according to these,The “New Monetary Policy Rules” of this paper consist of FCI Index and labor force participation,and take interest-rate smoothing into account.The empirical analysis part firstly use Vector Auto Regression(VAR)model to construct FCI index of China,and then test if it is feasible to China.Secondly,using Threshold Vector Auto Regression(TVAR)model,take FCI index or labor force participation as threshold,to test the movement of outputs,inflation,interest rate,asset price and labor force participation at two zone(low zone and high zone)when other variables change.The data of the paper is from January 2003 to April 2016,and threshold value are 4.112215 and-0.00001922716 when FCI index and labor force participation are threshold.At last,according to the outcome of TVAR test,I'll provide suggestions to alleviate the negative effect of financial accelerator.