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:: year 4, Issue 9 (fall 2011) ::
JMBR 2011, 4(9): 179-204 Back to browse issues page
Exchange Rate Volatility, Financial Imbalances and Optimal Monetary Policy
Hussain Sedqi *
Abstract:   (3724 Views)

The objective of this study is designing an optimal monetary policy rule in order to react to firms’ debt accumulation and stabilizing the economy. To address this، a DSGE model is designed where the effects of exchange rate oscillation، firms’ debt، and financial instability on the economy are investigated. The derived optimal monetary policy rule from this model shows that when the level of accumulated debt is high، the nominal interest rate (or the policy rule) should be increased. This can lead to financial stability through controlling over outstanding accumulated debt.

JEL Classification: E52, G01

Keywords: DSGE, Exchange Rate, Firm\'s Debt, Financial Instability
Full-Text [PDF 258 kb]   (1958 Downloads)    
Type of Study: Empirical Study |
Received: 2014/08/5 | Accepted: 2014/08/5 | Published: 2014/08/5
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year 4, Issue 9 (fall 2011) Back to browse issues page
فصلنامه پژوهش‌های پولی-بانکی Journal of Monetary & Banking Research
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