On May 25th,Yundong Xiao gave an academic report titled "Research on Financial Friction, Zero Interest Rate Lower Bound and China's Fiscal Multiplier".Part of the teachers and graduate students attended the lecture presided by Jie Li.

Yundong Xiao used Chinese economic data to calibrate and estimate model parameters, simulating the macroeconomic effects of China's fiscal policy and the size of the fiscal multiplier, taking into account financial frictions and the zero lower bound of interest rates, and drew corresponding research conclusions. First, in the case of financial friction, the impact of government spending shocks on macroeconomic variables is larger than that in the frictionless case, and the value of the fiscal multiplier is larger than that in the frictionless case. Second, the macroeconomic effect of tax policy is smaller than that of government spending, and the multiplier is much smaller than the multiplier of government spending, but the long-term effect of tax policy is greater than the short-term effect. Third, the fiscal multiplier is significantly larger in the case of the zero interest rate lower bound than in the case of the non-zero interest rate lower bound. Based on the above conclusions,Yundong Xiao introduced in detail the real environment that breeds financial risks, and listed the practical paths to prevent financial frictions one by one.

The academic forum which is informative and insightful broadened the horizons of the students and teachers, providing them with a deeper understanding of the financial friction.

copywriters: GuanyuXu, Ze Zhang

    Verifier: Xiang Li