This thesis aims to examine the response of a behavioural finance model and a financial frictions model to the financial crisis which was triggered in 2007.This thesis will test both models by using indirect inference as an evaluation method.The results of this study show that,when compared with the rational expectation model, behavioural expectation does not improve the model's ability to explain the real world. Therefore, behavioural expectation is unable to respond to the current crisis to form expectations .However,the financial frictions model which is suggested by the literature is found to be an efficient model that improves the model's overall performance. This thesis finds that although financial shocks contribute to the out put gap variation during the crisis, it does not respond so much to the variations of inflation and policy. interest rate.
| Identifer | oai:union.ndltd.org:bl.uk/oai:ethos.bl.uk:567342 |
| Date | January 2012 |
| Creators | Liu, Chunping |
| Publisher | Cardiff University |
| Source Sets | Ethos UK |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation |
| Source | http://orca.cf.ac.uk/36618/ |
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