Volume 3, Issue 8 (6-2012)                   jemr 2012, 3(8): 87-117 | Back to browse issues page

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tavakolian H, komijani A. Monetary Policy under Fiscal Dominance and Implicit Inflation Target in Iran: A DSGE Approach. jemr 2012; 3 (8) :87-117
URL: http://jemr.khu.ac.ir/article-1-539-en.html
1- University of Tehran , tavakoliyanh@ut.ac.ir
2- University of Tehran
Abstract:   (13854 Views)

  It is more likely that the monetary policy in Iran is discretionary and not based on a rule or a target. Besides, what is clear is that there have been explicit targets for inflation and economic growth in all five-year development plans (except the fifth plan). However, the question is that do policy makers observe the targets of development plans? Using an adjusted New Keynesian DSGE model for Iran, in this study we investigate the monetary policy under fiscal dominance and implicit inflation targeting of Iran. The results show that in most plans monetary authorities do not observe the explicit targets of five-year plans. The estimated monetary reaction function is only able to explain the period 2001-2011. The other result is that implementation delays of public projects have considerable effects on output and private consumption.

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Type of Study: Applicable | Subject: پولی و مالی
Received: 2012/09/3 | Accepted: 2012/11/12 | Published: 2012/09/15

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