IDEAS home Printed from https://ideas.repec.org/a/mbr/jmbres/v8y2015i23p1-38.html
   My bibliography  Save this article

Optimal, Discretionary and Rule-based Monetary policy in Achieving 5-year Development Plans’ Inflation Target: A Dynamic Stochastic General Equilibrium Approach (in Persian)

Author

Listed:
  • Tavakolian, Hossien

    (Assitant Prof., Allameh Tabataba'i University)

Abstract

In this study I make a Dynamic Stochastic General Equilibrium Model to study the monetary policy in Iran. Since monetary policy in Iran is not conducted using a specific rule, I first should modify the Taylor rule. The modified rule is such that the growth rate of monetary base is determined according to deviations of inflation and output from their target values. Although there are some inflation targets in Five-year Development Plans but there is no commitment to this targets. Therefore, we assume that there is implicit inflation targeting that is, there is inflation targeting for monetary authorities but the target value of inflation is not announced to public. Taking into account this assumption, monetary policy reaction function is estimated in a DSGE model. The empirical results show that there has been a kind of rule at the end of 70s and the beginning of 80s and that the implicit target has been higher than those of Development Plans. Dropping the modified rule from the model and solving it assuming discretionary and optimal monetary policies, the results suggest that in most periods the monetary policy has been conducted in a discretionary approach.

Suggested Citation

  • Tavakolian, Hossien, 2015. "Optimal, Discretionary and Rule-based Monetary policy in Achieving 5-year Development Plans’ Inflation Target: A Dynamic Stochastic General Equilibrium Approach (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. 8(23), pages 1-38, April.
    • Handle: RePEc:mbr:jmbres:v:8:y:2015:i:23:p:1-38
    as

    Download full text from publisher

    File URL: http://jmbr.mbri.ac.ir/article-1-225-en.pdf
    Download Restriction: no
    File URL: http://jmbr.mbri.ac.ir/article-1-225-en.html
    Download Restriction: no
    File URL: http://jmbr.mbri.ac.ir/article-1-225-fa.html
    Download Restriction: no
    ---><---

    More about this item

    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
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mbr:jmbres:v:8:y:2015:i:23:p:1-38. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: M. E. (email available below). General contact details of provider: https://edirc.repec.org/data/mbcbiir.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.