Abstract
The choice of instruments for mitigating economic volatility is a serious consideration for policymakers and important question in government and economics. Using a DSGE model with endogenous technology creation, we show that efficient financial markets are more effective than conventional economic policies, such as fiscal interventions, in reducing economic volatility. Our findings are consistent with data from the Chinese and the US economies who contrast in structure perfectly for the purpose of our comparison. The implication is that rather than focusing on conventional economic policies, a government should help establish efficient financial markets to allow producers a hedge into equity finance during times of financial stress.
| Original language | English |
|---|---|
| Pages (from-to) | 100059 |
| Journal | Journal of Government and Economics |
| Early online date | 21 Jan 2023 |
| DOIs | |
| Publication status | Published - 6 Feb 2023 |
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Middleditch, P., Haque, M. E., & Zhang, S. (2023). Mitigating economic volatility: When building efficient financial markets should supersede conventional economic policy. Journal of Government and Economics, 100059. https://doi.org/10.1016/j.jge.2023.100059
Middleditch, Paul ; Haque, M. Emranul ; Zhang, Shuonan. / Mitigating economic volatility: When building efficient financial markets should supersede conventional economic policy. In: Journal of Government and Economics. 2023 ; pp. 100059.
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abstract = "The choice of instruments for mitigating economic volatility is a serious consideration for policymakers and important question in government and economics. Using a DSGE model with endogenous technology creation, we show that efficient financial markets are more effective than conventional economic policies, such as fiscal interventions, in reducing economic volatility. Our findings are consistent with data from the Chinese and the US economies who contrast in structure perfectly for the purpose of our comparison. The implication is that rather than focusing on conventional economic policies, a government should help establish efficient financial markets to allow producers a hedge into equity finance during times of financial stress.",
author = "Paul Middleditch and Haque, {M. Emranul} and Shuonan Zhang",
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Middleditch, P, Haque, ME & Zhang, S 2023, 'Mitigating economic volatility: When building efficient financial markets should supersede conventional economic policy', Journal of Government and Economics, pp. 100059. https://doi.org/10.1016/j.jge.2023.100059
Mitigating economic volatility: When building efficient financial markets should supersede conventional economic policy. / Middleditch, Paul; Haque, M. Emranul; Zhang, Shuonan.
In: Journal of Government and Economics, 06.02.2023, p. 100059.
Research output: Contribution to journal › Article › peer-review
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AU - Zhang, Shuonan
PY - 2023/2/6
Y1 - 2023/2/6
N2 - The choice of instruments for mitigating economic volatility is a serious consideration for policymakers and important question in government and economics. Using a DSGE model with endogenous technology creation, we show that efficient financial markets are more effective than conventional economic policies, such as fiscal interventions, in reducing economic volatility. Our findings are consistent with data from the Chinese and the US economies who contrast in structure perfectly for the purpose of our comparison. The implication is that rather than focusing on conventional economic policies, a government should help establish efficient financial markets to allow producers a hedge into equity finance during times of financial stress.
AB - The choice of instruments for mitigating economic volatility is a serious consideration for policymakers and important question in government and economics. Using a DSGE model with endogenous technology creation, we show that efficient financial markets are more effective than conventional economic policies, such as fiscal interventions, in reducing economic volatility. Our findings are consistent with data from the Chinese and the US economies who contrast in structure perfectly for the purpose of our comparison. The implication is that rather than focusing on conventional economic policies, a government should help establish efficient financial markets to allow producers a hedge into equity finance during times of financial stress.
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Middleditch P, Haque ME, Zhang S. Mitigating economic volatility: When building efficient financial markets should supersede conventional economic policy. Journal of Government and Economics. 2023 Feb 6;100059. Epub 2023 Jan 21. doi: 10.1016/j.jge.2023.100059
