Monetary Policy, Corporate Behavior And Business Cycles

The frame of monetary policy analysis based on dynamic stochastic general equilibrium has become the fundamental research paradigm of contemporary monetary theory and policy. However, the micro-base of this model is still being explored and in progress. Another problem of this frame is that its power may decrease and it may even out of work when it is used into underdeveloped country, because the structure of this frame mainly aims at the developed country or market economy. Considered this background, this article intensively and systemic studies the important micro-base of monetary policy effect: firm behavior, and explores the mechanism of the process of monetary policy, firm behavior and business cycle in the frame of monetary policy analysis based on dynamic stochastic general equilibrium, and tries to extend the basic dynamic stochastic general equilibrium monetary policy model through discriminating state-owned and private-owned firm.The article first surveys the documents about monetary policy, firm behavior and business cycle, and then illustrates the basic dynamic stochastic general equilibrium monetary policy model. Based on this work, the article analyses the behavior of investment decision of state-owned and private-owned firm, and realizes the first extension of the basic model. Following this research rule which is from simple to complication and relaxes presumptions gradually, the article in turn gives the theoretical and positive analysis of the decisive behavior of state-owned and private-owned firm from the perspectives of firm financing, firm cost and firm entry and exit, then in turn realizes the extension of the basic model, and eventually builds an dynamic stochastic general equilibrium monetary policy model which includes the former four kinds of firm behavior and bases on the two elements structure of state-owned and private-owned firm, and based on Chinese data, the article gives numerical simulation of the model. In the end, the article proposes relevant policy suggestions.Based on these contents and consideration of research, the core innovation of the article can be generalized in extending the basic dynamic stochastic general equilibrium monetary policy model through constructing the dynamic stochastic general equilibrium monetary policy model bases on the two elements structure of state-owned and private-owned firm in sight of Chinese practice, and then the article incorporates the soft budget constrain into the mainstream paradigm of monetary policy analysis. So, the article gives primitive try in developing and building dynamic stochastic general equilibrium monetary policy model for developing country. In details, the core innovation of the article can be expressed in:(1) constructing three models which bases on the two elements structure of state-owned and private-owned firm, and which respectively includes endogenous firm investment and soft budget constrain, incorporates soft budget constrain into financial accelerator, includes all the four firm behaviors:investment, financing, cost, entry and exit; (2) Based on the panel data of Chinese firm and industry level, the article positively studies the effect of monetary shock on firm cost and entry and exit, and positively analyses the rate-augmented Philips curve through using Chinese data; (3) Based on Chinese data, the article gives the calibration of parameters value and numerical simulation of the dynamic stochastic general equilibrium monetary policy model which bases on the two elements structure of state-owned and private-owned firm, and includes all the firm behavior of investment, financing, cost, entry and exit, and then gives comparative analysis between real and simulative data.Based on these studies, the article obtains following conclusions:(1) From the perspective of firm investment, when introducing endogenous firm investment and soft budget, the summit of the effect of monetary policy is weakened, but its persistence isn't influenced. The investment fluctuation of state-owned firm is in all less than that of private-owned firm, however, in the expansive period, the investment fluctuation of state-owned firm is more than that of private-owned firm and in the contractive period, it is less than that of private-owned firm; (2) From the perspective of firm financing, when incorporating soft budget, the financial accelerator effect of monetary policy becomes more complex. When the rate of state-owned firm is high, the financial accelerator hardly works, and the effect of monetary policy cannot even catch up with the level of the basic model. However, When the rate of state-owned firm decreases some level(for example 0.1), the shock of monetary policy generates an very strong effect in short period, even belong the level of the financial accelerator effect, but the persistence is very weak, and then makes the economy fluctuate largely; (3) From the perspective of firm cost, on the one hand, the positive analysis suggests that monetary policy shock generates significant effect on firm cost both on aggregate or micro level, and the cost channel of monetary policy is supported. On the other hand, the positive research of rate-augmented Philips curve suggests that rate significantly enters into the equation of inflation dynamic, but the existence of the cost channel of monetary policy is sensitive to selection of the formation of inflation expectation; (4) From the perspective of firm entry and exit, the positive analysis suggests that monetary policy shock have significant effect on self-employed rate, but have no significant effect on amounts of private-owned firm. Monetary policy shock generates significant effect on amounts of firm in industry level, but credit shock has the most, interest rate shock has the more and monetary supply has no significant effect; (5) The dynamic stochastic general equilibrium monetary policy model which bases on the two elements structure of state-owned and private-owned firm, and includes all the firm behavior of investment, financing, cost, entry and exit, can simulate the stylized facts of Chinese macro-economy quiet well, especially fluctuation of inflation and the amounts of state-owned firm.