Energy Price Shock, Economic Fluctuation And Optimal Monetary Policy Rule Selection

《BP statistical review of world energy 2014》shows that China remains the world’s largest energy consumer。China consumed 2852.4 million tons of oil equivalent in 2013,accounting for 22.4% of total energy consumption in the world。The dependence of foreign oil in 2013 was estimated at about 58 percent,the dependence of foreign natural gas reached 31.6 percent, which make the energy price of China more susceptible to the fluctuation of foreign crude oil and other energy price。As energy is one of the important inputs for the production,it is worth studying whether should the Monetary authorities deal with the volatility of energy price。New Keynesian DSGE model with microscopic foundation is the mainstream tool for the analysis of macro economy,which can conduct dynamic analysis about the impaction of variables and study the choice of monetary policy rule。Based on this,this paper constructs a dynamic stochastic general equilibrium(DSGE) model to analyze how the volatility of energy price impact the Chinese economy and how to choose Monetary policy rule。The Chapter 3 of this article builds a new Keynesian model,which includes the productive factors of labor 、 capital and energy in the production function。We estimate the dynamic parameters of the model by using Bayesian methods。Based on the model,we explore how the energy price shocks impact output 、 inflation and other key macroeconomic variables of China and the choice of monetary policy rule。The empirical results show the positive energy price shocks have a significant negative impaction on macro economy,which reduce the output and lead the rise of inflation。And we study whether the optimal monetary policy rule should react to the volatility of energy price。We found that if we make gently feedback to the energy price volatility in the traditional policy rule will reduce the loss value of the central bank’s function。We found that if we increase the reaction to the fluctuation of inflati on will lead to the increase of the loss value。If we increase the reaction to the fluctuation of output will lower the loss value。From the analysis above, we come to the conclusion that the Monetary authority should choose to pay more attention to the stability of the output,raise the tolerance of inflation when we face the energy price shocks。This will be more beneficial to the stability of our macroeconomic variables。...