The Research And Evaluation Of Economy Stimulation Policies Based On DSGE Model

The economic fluctuation is an eternal theme in macro-economic research. The global economy has always experienced fluctuation. The nearest large-scale economic fluctuation is the global financial crisis, which started from the second half of2008and continues till now. To deal with this financial crisis, most of the governments have applied more than one turn of economy stimulation policies. These policies focus on different aspects. There is also not a consensus of the appraisal of these policies. So there come some questions: whether a government should positively intervene the economy to control fluctuation? Which kind of economy stimulation policies is the best? How to evaluate a kind of economy stimulation policy? It is undoubtedly very meaningful for both theory and practice if someone can successfully answer these questions.The dissertation constructs a small economy Keynesian dynamic stochastic general equilibrium (DSGE) model and sets economy stimulation policies as shock to study the positive effects and side effects of monetary policy, exchange rate policy and fiscal policy through programming. Both capital control and capital flow environments are considered. The analysis of simulation shows some meaningful conclusions. Overall expansion of government spending is better than monetary expansion and currency devaluation. A government can apply expansion of government spending to intervene the economy. The changes of important parameters basically don’t affect qualitative conclusions, but do have some effects on quantitative conclusions. Capital control or not is not an important factor in studying economy stimulation policies. The dissertation also confirms the side effects of economy stimulation plans.