The Impact of Electronic Money on Monetary Policy: Based on DSGE Model Simulations

Sumei Luo, Guangyou Zhou and Jinpeng Zhou
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Sumei Luo: School of Finance, Shanghai University of Finance and Economics, Shanghai 200433, China
Guangyou Zhou: School of Economics, Fudan University, Shanghai 200433, China
Jinpeng Zhou: School of Economics, Fudan University, Shanghai 200433, China

Mathematics, 2021, vol. 9, issue 20, 1-26

Abstract: Starting with the interactive relationship between electronic money and household consumption stimuli, this paper deeply analyzes the changes in the behavior of each monetary subject under the impact of electronic money, and establishes a DSGE model based on the three economic sectors of family, commercial bank and central bank under the New Keynesian framework. On this basis, the impact of electronic money on savings, loans, output and the interest rate, and its impact on monetary policy, are described by numerical simulation. The simulation results show that: (1) electronic money has asymmetric effects on savings and loans, but an irrational deviation on households; (2) the influence of electronic money on the interest rate has a reverse effect, and the “inverse adjustment” of the interest rate increases the management difficulty of the micro subject to a certain extent, and affects the effectiveness of monetary policy; (3) the regulatory effect of price monetary policy is better than that of quantitative monetary policy, and electronic money has the effect of its risk restraining impact. Finally, based on the analysis, this paper gives policy recommendations.

Keywords: electronic money; monetary policy; DSGE model; policy simulation (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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