Research On The Inconsistency Between The Fluctuation Of GDP And Employment Based On DSGE Model

With the acceleration of the process of economic globalization, the world economy is growing rapidly. However, it is undeniable that a country may occur in the event of unrest. Whether people can find work and they income level can meet their daily expenses is the point that a country can stabilize and forward.So employment and GDP are two essential factors in the country’s growth.But our country has been experiencing wild economic undulation, while the employment fluctuations relatively much smaller. And most of the time they do not agree with the direction of change. Therefore to explore the two is essential. We researched the reason why the fluctuations in GDP and employment are so different on dynamic stochastic general equilibrium(DSGE for short hence force) model.One DSGE model was established. Using Bayesian method to estimate the parameters of the model. Then, estimated value of different shocks using Kalman smoothing algorithm. To research the effects to endogenous variables undulation under the influence of a single shock,we can substitute each estimated shock back into the model. Hence, the impact of each shock on the GDP and employment could be studied. We found that the technology shock is the main source of China’s real economy fluctuations, and the effects of government expenditure and net export to GDP is very small. Technological progress bring more Capital equipment investment and lead to a substitution of labor force. The impact of technology shocks on employment fluctuation is opposite to the direction of GDP fluctuation. This leads to the inconsistency of employment and output fluctuations in real economy.The first chapter is the introduction. In the second chapter, the methods used in this paper were summarized and deduced. In the third chapter, we used the method of the second chapter to study this theory and equilibrium. In the fourth chapter, we empirically analyzed the model. We summarized the paper in the last chapter.