Structural Monetary Policy and Heterogeneous Enterprise Leverage Ratio—Based on the Perspective of Soft Budget Constraints
By constructing a dynamic stochastic general equilibrium model that includes soft budget constraints and financial accelerators, it explores the impact of "hardened" soft budget constraints on the economy and the differences in the response effects of different monetary policies. The study found that: First, weakening the soft budget constraint can alleviate the structural high leverage problem and reduce the distortion of the economy, but at the cost of a decline in total output. When the economy encounters a risk shock, the existence of soft budget constraints can calm economic fluctuations, but hinder the normal clearing of the market, causing a series of problems such as overcapacity and rising inventories. Second, the “one size fits all” tight monetary policy will not only fail to reduce the leverage ratio, but will also further increase the leverage ratio and exacerbate the degree of distortion of the economic structure. In contrast, structural monetary policies such as targeted adjustment of the reserve ratio are a better choice to deal with structurally high leverage in an economy. Third, monetary policy responds to the leverage ratio of non-financial enterprises (especially the leverage ratio of state-owned enterprises) to help reduce welfare losses.