The Effect of Credit Easing Shocks as an Auxiliary Tool of Monetary Policy on Macroeconomic Variables:Using the QUAL VAR Approach

Rostamzadeh, Parviz; Soltani Shirazi, Elizabeth; Shahnazi, Rouhollah; Owjimehr, Sakine

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The Effect of Credit Easing Shocks as an Auxiliary Tool of Monetary Policy on Macroeconomic Variables:Using the QUAL VAR Approach

Parviz Rostamzadeh ^*

¹, Elizabeth Soltani Shirazi²

, Rouhollah Shahnazi²

, Sakine Owjimehr²

1- Shiraz University , parvizrostamzadeh@shirazu.ac.ir
2- Shiraz University

Abstract: (630 Views)

Unconventional monetary policies entered the field of economic discussions after the global financial crisis of 2008 and with the ineffectiveness of conventional monetary policies and have been considered with the aim of combating the reduction of money supply and economic recession. One of the important tools used to implement unconventional monetary policies is credit esing, which obviously does not have a quantitative value, and on the other hand, its prediction and impact on macroeconomic variables is of particular importance. In this research, the effect of the shocks resulting from the implementation of the credit easing policy on Iran's macroeconomic variables is investigated using the QUAL VAR method. In this way, using standard, simulated and quantified methods, the effect of credit easing policy shocks on macroeconomic variables during the years 2001 to 2022 is investigated using various tests. The results show that the impact of the mentioned policy shocks in the first months after the shock has caused a 0.04 percent decrease in the real GDP growth rate, a 0.01 percent increase in the inflation rate, and a 0.03 percent decrease in the employment rate and then in the following months, it will increase real GDP growth rate and employment rate. The mentioned shocks caused a 0.03 percent increase in the monetary base. Therefore, these applied shocks increase growth expectations. In general, the results show the fact that the policy of credit easing has led to an expansion in the assets side of the Central Bank's balance sheet, and by applying the necessary controls, it can be a suitable tool for stabilizing and growing macroeconomic variables in the months after its implementation and dealing with recessionary conditions.

Keywords: Unconventional monetary policy, credit easing, QUAL VAR