Posted on 15 December 2011.
In discussions about the efficacy of monetary policy instruments, attention is often focused on analyzing the money supply process. Monetarists, in general, argue that the monetary authorities can exercise effective control over the stock of money; others, especially those who share the new view of monetary theory argue that the determination of the stock of money is part of the economy. In this view, the stock of money is the outgrowth of the behavior of the public, the financial sector (banks), the finance ministry, and the rest of the world as well as of the actions of the central bank. The paper investigated the co-integrating property and stability of the supply of money function in Iran. The paper employed the ARDL approach together with CUSUM and CUSUMSQ tests. The results show that M1 and M2 is co- integrated with net claims on the government, net foreign assets, and rate of profit on bank deposit (interest rate and a major implication of using interest rate elasticity estimates from M2 function is that money is endogenous.
How Much Control Dose Central Bank of Iran over Money Supply? (899.1 KiB, 541 hits)
Posted in Economics, Issue no. 7
Posted on 15 October 2011.
In this paper we try to check if and how the macroeconomic performances induced by a Taylor’s rule based kind of monetary policy are (or not) more efficient than those effectively induced by the most important central bank’s monetary policies. In this kind of respect, we use a simple three equations model: a Phillips equation, an aggregate demand equation and a fixing rule for the main interest rate. Based on historical simulation as well as on stochastic simulation, it turns out that macroeconomic performances, in terms of inflation and productivity gap, would be more stable and efficient if the Taylor’s rule would be used by a certain central bank in fixing its main interest rate.
The Macroeconomic Performance of Monetary Policies. A Stochastic Simulation Based on the Taylor’s Rule (939.5 KiB, 793 hits)
Posted in Economics, Issue no. 6
Posted on 15 February 2011.
There is widespread agreement that monetary policy matters,but there is disagreement about how it should be conducted. Behind this disagreement lie differences in theoretical understandings. The paper contrasts the New Classical, Neo-Keynesian, and Post-Keynesian frameworks, there by surfacing the differences. The New Classical model has policy only affecting long run inflation. The Neo-Keynesian has policy impacting inflation, unemployment, and real wages. The Post-Keynesian model also impacts growth, so policy implicitly picks a quadruple. Inflation targeting is a sub-optimal policy frame because it biases decisions toward low inflation by obscuring the fact that policy also affects unemployment, real wages, and growth.
Monetary Policy and Economic Policy (236.1 KiB, 1,431 hits)
Posted in Economics, Issue no. 2