Tag Archive | "financial sector"

How Much Control Dose Central Bank of Iran over Money Supply?

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, 3,457 hits)

Posted in Economics, Issue no. 7