Investigation and Comparison of the Financing Costs Through the Financial Intermediates on Household Behavior(DSGE Model)

Subject Areas : Financial engineering

hamidreza  izadi ¹ (Department of Economics, Faculty of Management and Humanities, Chabahar Maritime University, Chabahar, Iran.)

Received: 2020-09-09 Accepted : 2020-10-20 Published : 2021-06-22

Keywords: Borrowing, DSGE Model, Financing Costs, Financial Intermediates,

Abstract :

Financing to implement macroeconomic policies in the public and private sectors is one of the most important factors in achieving economic goals in any country. On the one hand, easy access and on the other hand, amount of financing costs of these funds via the financial intermediaries whose role is to provide these resources, can lead to change in the dynamics of macroeconomic variables and Consider as an important factor in volatilities in business cycle. Given the importance of role of financing costs in economic modeling, this paper seeks to investigate the role of borrowing and financing costs in economic models by designing a dynamic stochastic general equilibrium model and Compare the impact of such costs on the behavior of macroeconomic variables. Comparison of the results of the impulse-response functions of the variables shows that the entering of financing costs into the model led to reduce of the impact of shocks on the variables. In fact, the existence of these costs can change household investment decisions and cause investment to be delayed until the financing costs of financial intermediates are at their lowest and the investment horizon changed.