Sticky Prices, Wages and Monetary Policy in the Iranian Economy
Fluctuations in fiscal policy affect monetary policy and the central bank, because the government’s general budget is highly dependent on oil prices and its fluctuations. Therefore, this paper designs a New Keynesian model for Iran with nominal rigidities (prices and wages) and analyzes the impact o...
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| Format: | Article |
| Language: | fas |
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Tarbiat Modares University
2012-05-01
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| Series: | پژوهشهای اقتصادی |
| Subjects: | |
| Online Access: | http://ecor.modares.ac.ir/article-18-6736-en.pdf |
| _version_ | 1797803146893852672 |
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| author | Seyed Fakhredin Fakhrehosseini Asghar Shahmoradi Mohammad Ali Ehsani |
| author_facet | Seyed Fakhredin Fakhrehosseini Asghar Shahmoradi Mohammad Ali Ehsani |
| author_sort | Seyed Fakhredin Fakhrehosseini |
| collection | DOAJ |
| description | Fluctuations in fiscal policy affect monetary policy and the central bank, because the government’s general budget is highly dependent on oil prices and its fluctuations. Therefore, this paper designs a New Keynesian model for Iran with nominal rigidities (prices and wages) and analyzes the impact of technology, oil price, government spending and money supply shocks on macroeconomic variables (inflation, output) in economy of Iran. 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. Having logarithms taken, the variables are de-traded through Hodrick - Prescott filter. The final model equations are linearized around the steady state and using Uhlig (1999) approach, accidental equations are also linearized and are specified as space state pattern in Matlab software. Finally, the calibration of parameters are assessed, variables are simulated and compared with real data. The results show that the recommended model can simulate the impact of shocks on macroeconomic variables. It also shows that inflation rises in response to all shocks except that of technology. As the figures show, it is also revealed that non-oil output increases in response to technology, oil price, government spending and money supply. |
| first_indexed | 2024-03-13T05:17:30Z |
| format | Article |
| id | doaj.art-bca3368a173a4949a8c88cd95afac858 |
| institution | Directory Open Access Journal |
| issn | 1735-6768 2980-7832 |
| language | fas |
| last_indexed | 2024-03-13T05:17:30Z |
| publishDate | 2012-05-01 |
| publisher | Tarbiat Modares University |
| record_format | Article |
| series | پژوهشهای اقتصادی |
| spelling | doaj.art-bca3368a173a4949a8c88cd95afac8582023-06-15T20:34:21ZfasTarbiat Modares Universityپژوهشهای اقتصادی1735-67682980-78322012-05-01121130Sticky Prices, Wages and Monetary Policy in the Iranian EconomySeyed Fakhredin Fakhrehosseini0Asghar Shahmoradi1Mohammad Ali Ehsani2 Ph.D. Student of Economics, University of Mazandaran Assistant Professor of Economics, Tehran University Assistant Professor of Economics, University of Mazandaran Fluctuations in fiscal policy affect monetary policy and the central bank, because the government’s general budget is highly dependent on oil prices and its fluctuations. Therefore, this paper designs a New Keynesian model for Iran with nominal rigidities (prices and wages) and analyzes the impact of technology, oil price, government spending and money supply shocks on macroeconomic variables (inflation, output) in economy of Iran. 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. Having logarithms taken, the variables are de-traded through Hodrick - Prescott filter. The final model equations are linearized around the steady state and using Uhlig (1999) approach, accidental equations are also linearized and are specified as space state pattern in Matlab software. Finally, the calibration of parameters are assessed, variables are simulated and compared with real data. The results show that the recommended model can simulate the impact of shocks on macroeconomic variables. It also shows that inflation rises in response to all shocks except that of technology. As the figures show, it is also revealed that non-oil output increases in response to technology, oil price, government spending and money supply.http://ecor.modares.ac.ir/article-18-6736-en.pdfdynamic stochastic general equilibrium modelc61e32calibrationsticky prices and wages jel classification: e31e52e62 |
| spellingShingle | Seyed Fakhredin Fakhrehosseini Asghar Shahmoradi Mohammad Ali Ehsani Sticky Prices, Wages and Monetary Policy in the Iranian Economy پژوهشهای اقتصادی dynamic stochastic general equilibrium model c61 e32 calibration sticky prices and wages jel classification: e31 e52 e62 |
| title | Sticky Prices, Wages and Monetary Policy in the Iranian Economy |
| title_full | Sticky Prices, Wages and Monetary Policy in the Iranian Economy |
| title_fullStr | Sticky Prices, Wages and Monetary Policy in the Iranian Economy |
| title_full_unstemmed | Sticky Prices, Wages and Monetary Policy in the Iranian Economy |
| title_short | Sticky Prices, Wages and Monetary Policy in the Iranian Economy |
| title_sort | sticky prices wages and monetary policy in the iranian economy |
| topic | dynamic stochastic general equilibrium model c61 e32 calibration sticky prices and wages jel classification: e31 e52 e62 |
| url | http://ecor.modares.ac.ir/article-18-6736-en.pdf |
| work_keys_str_mv | AT seyedfakhredinfakhrehosseini stickypriceswagesandmonetarypolicyintheiranianeconomy AT asgharshahmoradi stickypriceswagesandmonetarypolicyintheiranianeconomy AT mohammadaliehsani stickypriceswagesandmonetarypolicyintheiranianeconomy |