Optimal and Discretionary Monetary and Exchange Policies in Iran: A DSGE Approach
Macroeconomic equilibrium depends on both current and future behaviour of the monetary authority. Policymaker can manage economic agents' expectation by determining a specific rule in monetary policy and commit to it. There is a vast literature on central banks incentive in instrument and targe...
| Main Authors: | , |
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| Format: | Article |
| Language: | fas |
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Allameh Tabataba'i University Press
2017-04-01
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| Series: | فصلنامه پژوهشهای اقتصادی ایران |
| Online Access: | https://ijer.atu.ac.ir/article_7966_27f8c750c9f4aec7bb518f1db525f37e.pdf |
| _version_ | 1797369283246817280 |
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| author | Hossein Tavakolian Ahmadreza Jalali Naeeni |
| author_facet | Hossein Tavakolian Ahmadreza Jalali Naeeni |
| author_sort | Hossein Tavakolian |
| collection | DOAJ |
| description | Macroeconomic equilibrium depends on both current and future behaviour of the monetary authority. Policymaker can manage economic agents' expectation by determining a specific rule in monetary policy and commit to it. There is a vast literature on central banks incentive in instrument and target choice in monetary economics. According to this literature, this paper studies discretionary and Ramsey optimal monetary policies for Iran in a small open economy dynamic stochastic general equilibrium model which is modified to capture the properties of the economy of Iran. The empirical results show that if there is a commitment to targets, monetary authority can control inflation. However, if the authority implements discretionary monetary policy, despite having two policy instruments of monetary base growth rate and nominal exchange rate depreciation, central bank could not manage expectations and would face inflation bias and higher volatilities. |
| first_indexed | 2024-03-08T17:44:28Z |
| format | Article |
| id | doaj.art-012b78925d294f50917b0ec4628817bc |
| institution | Directory Open Access Journal |
| issn | 1726-0728 2476-6445 |
| language | fas |
| last_indexed | 2024-03-08T17:44:28Z |
| publishDate | 2017-04-01 |
| publisher | Allameh Tabataba'i University Press |
| record_format | Article |
| series | فصلنامه پژوهشهای اقتصادی ایران |
| spelling | doaj.art-012b78925d294f50917b0ec4628817bc2024-01-02T10:29:23ZfasAllameh Tabataba'i University Pressفصلنامه پژوهشهای اقتصادی ایران1726-07282476-64452017-04-012270339810.22054/ijer.2017.79667966Optimal and Discretionary Monetary and Exchange Policies in Iran: A DSGE ApproachHossein Tavakolian0Ahmadreza Jalali Naeeni1Assistant Professor of Allameh Tabataba’i University, Tehran, IranAssociate Professor, Institute for management and planning studies, Tehran, Iran.Macroeconomic equilibrium depends on both current and future behaviour of the monetary authority. Policymaker can manage economic agents' expectation by determining a specific rule in monetary policy and commit to it. There is a vast literature on central banks incentive in instrument and target choice in monetary economics. According to this literature, this paper studies discretionary and Ramsey optimal monetary policies for Iran in a small open economy dynamic stochastic general equilibrium model which is modified to capture the properties of the economy of Iran. The empirical results show that if there is a commitment to targets, monetary authority can control inflation. However, if the authority implements discretionary monetary policy, despite having two policy instruments of monetary base growth rate and nominal exchange rate depreciation, central bank could not manage expectations and would face inflation bias and higher volatilities.https://ijer.atu.ac.ir/article_7966_27f8c750c9f4aec7bb518f1db525f37e.pdf |
| spellingShingle | Hossein Tavakolian Ahmadreza Jalali Naeeni Optimal and Discretionary Monetary and Exchange Policies in Iran: A DSGE Approach فصلنامه پژوهشهای اقتصادی ایران |
| title | Optimal and Discretionary Monetary and Exchange Policies in Iran: A DSGE Approach |
| title_full | Optimal and Discretionary Monetary and Exchange Policies in Iran: A DSGE Approach |
| title_fullStr | Optimal and Discretionary Monetary and Exchange Policies in Iran: A DSGE Approach |
| title_full_unstemmed | Optimal and Discretionary Monetary and Exchange Policies in Iran: A DSGE Approach |
| title_short | Optimal and Discretionary Monetary and Exchange Policies in Iran: A DSGE Approach |
| title_sort | optimal and discretionary monetary and exchange policies in iran a dsge approach |
| url | https://ijer.atu.ac.ir/article_7966_27f8c750c9f4aec7bb518f1db525f37e.pdf |
| work_keys_str_mv | AT hosseintavakolian optimalanddiscretionarymonetaryandexchangepoliciesiniranadsgeapproach AT ahmadrezajalalinaeeni optimalanddiscretionarymonetaryandexchangepoliciesiniranadsgeapproach |