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:: year 7, Issue 22 (Winter 2015) ::
JMBR 2015, 7(22): 533-568 Back to browse issues page
Oil Price Shocks and Monetary Policy in Iran: The New Keynesian Approach
Maryam Faraji *1, Zahra Afshari, Ilnaz Ebrahimi
Abstract:   (2519 Views)

Oil price shocks are the major source of economic instability in oil exporting countries, as well as Iran. Also the appropriate monetary policy can play an important role in decreasing these undesirable variations. In this paper, to investigate the optimal monetary policy rule after an oil price shock for the economy of Iran, a New Keynesian Multi sectors Dynamic Stochastic General Equilibrium framework model with emphasis on oil sector optimization and considering the subsidy of energy price, is designed. The model is estimated by a Bayesian method and then it is used to evaluate the effect of different monetary policy rules. Our main findings reveal that among three different monetary policy rules under consideration i.e. CPI inflation targeting, PPI inflation targeting and real exchange rate targeting in the 1367:1-1391:1 period, PPI inflation targeting policy rule is more effective in stabilizing the inflation. Moreover compare to other policy rules, It is accompanied by the lowest welfare losses.

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Type of Study: Case Study | Subject: Monetary Policy, Central Banking, and the Supply of Money and Credit (E5)
Received: 2015/02/20 | Accepted: 2015/08/31 | Published: 2016/07/20
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year 7, Issue 22 (Winter 2015) Back to browse issues page
فصلنامه پژوهش‌های پولی-بانکی Journal of Monetary & Banking Research
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