Firm Perception of Uncertainty,Financial Accelerator Effect and Economic Fluctuations
This paper constructs a DSGE model incorporating financial frictions and heterogeneous risk preferences to investigate the impact of uncertainty shocks and firms'risk perceptions on eco-nomic fluctuations in China.The findings indicate that financial frictions amplify the effects of un-certainty shocks,resulting in a significant financial accelerator effect.However,firms'risk aversion attenuates this effect,with higher proportions of risk-averse firms leading to a stronger dampening on the financial accelerator effect.This is because firms'perception of uncertainty triggers manage-rial risk aversion,reducing the magnitude of default rates,the increase in financing premium,and the decline in investment expenditure,thereby weakening the financial accelerator effect.The higher the degree of risk aversion,the smaller the increase in corporate debt financing costs,as well as the decrease in investment expenditure and leverage ratio,thus mitigating the risks arising from uncertainty shocks.Welfare analysis indicates that firms'risk aversion helps alleviate investment and output fluctuations caused by financial frictions,thereby enhancing social welfare.Consequent-ly,this paper proposes policy recommendations aimed at enhancing firms'risk aversion awareness,improving the efficiency of financial market allocations,and promoting the high-quality development of finance.
Perception of UncertaintyRisk PreferenceFinancial Accelerator EffectEconomic Fluctua-tions
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