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Evaluation of Effects of Monetary Policy on Iranian Economy In a Monetary Business Cycle Framework (in Persian)

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  • Fakhrhosseini, Sayyed Fakhrodin

    (Iran)

Abstract

The Dynamic Stochastic General Equilibrium (DSGE) model has developed the bases for macroeconomic policies. The main aim in this research has been to introduce a DSGE model corresponding to the developing economy of Iran and then to evaluate the effects of monetary policy in the framework of business cycles. The data in this article are related to the fixed prices in the year 2004 and run annually from 1966 to 2008 on a per capita basis. Thus, we have developed a DSGE model for Iran and we have seen that the shock of monetary growth rate increases inflation and its effect on the real variables such output and employment is very low in Iran. In other words, the money is neutral in a non-sticky price framework. Moreover, oil revenue shocks injected through monetary channel will increase inflation (nearly 0.6 percent deviation from the steady state). Otherwise, the net assets of the central bank will not change and the inflation will raise a little. JEL Classification Codes: E31, E32, E52

Suggested Citation

  • Fakhrhosseini, Sayyed Fakhrodin, 2013. "Evaluation of Effects of Monetary Policy on Iranian Economy In a Monetary Business Cycle Framework (in Persian)," Journal of Monetary and Banking Research (فصلنامه پژوهش‌های پولی-بانکی), Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 6(14), pages 111-132, March.
    • Handle: RePEc:mbr:jmbres:v:6:y:2013:i:14:p:111-132
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    More about this item

    Keywords

    Dynamic Stochastic General Equilibrium; Monetary policy; Business cycles; Inflation; Iran;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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