Volume 9, Issue 31 (3-2018)
jemr 2018, 9(31): 71-101 |
Back to browse issues page
Download citation:
BibTeX | RIS | EndNote | Medlars | ProCite | Reference Manager | RefWorks
Send citation to:
BibTeX | RIS | EndNote | Medlars | ProCite | Reference Manager | RefWorks
Send citation to:
Izadkhasti H. Analyzing the Impact of Monetary Policy in a Dynamic General Equilibrium Model: Money in Utility Function Approach. jemr 2018; 9 (31) :71-101
URL: http://jemr.khu.ac.ir/article-1-1523-en.html
URL: http://jemr.khu.ac.ir/article-1-1523-en.html
Shahid Beheshti University , h_izadkhasti@sbu.ac.ir
Abstract: (7030 Views)
The impact of monetary policy on nominal and real variables in the economy is very important and controversial issues in monetary economics. Thus, the interaction between the real and monetary sectors, are the questions that different schools of economic have different responses and assumptions in this design is neutral and super-neutral of money in the long run. Accordingly, the acceptance or rejection each of the above hypotheses, effects on the role of monetary policy in the economy. This study, has been investigated the effects of monetary policy in the framework of a dynamic general equilibrium model on inflation and welfare, based on the money in utility function in Iran's economy. Then, the model is solved by using dynamic optimization and analyzed the results in the steady state. Calibration results and sensitivity analysis in steady state indicate that by decreasing the growth rate of money supply from 22% in the base state to 12%, reduces inflation rate from 20.45% to 10.57% decrease and increases real money balances from 0.1304 to 0.1352 unit, But the ratio of capital to labor, per capita production and per capita consumption do not change in the steady state. Finally, with a decrease in the rate of monetary growth and the increase in real money balances, the welfare increases in the steady state situation.
Type of Study: Applicable |
Subject:
پولی و مالی
Received: 2017/01/1 | Accepted: 2018/04/30 | Published: 2018/06/13
Received: 2017/01/1 | Accepted: 2018/04/30 | Published: 2018/06/13
References
1. Asako, K. (1983). "The Utility Function and the Super Neutrality of Money on the Transition Path", Econometrica, 51(5): 1593-1596. [DOI:10.2307/1912293]
2. Blanchard, O. J. & S. Fischer, (1989). "Lectures on Macroeconomics, Cambridge, MA: MIT Press.
3. Begg, D.K.H. (1980). "Rational Expectations and the Non-neutrality of Systematic Monetary Policy", Review of Economic Studies, 47: 293-303. [DOI:10.2307/2296993]
4. Burriel, P, Jesus, F-V., and Juan F. Rubio-Ramirez. (2010). "MEDEA: A DSGE model for the Spanish economy, Research Discussion Paper. [DOI:10.2139/ssrn.1400124]
5. Chuku, A. (2011). "Testing Long-Run Neutrality Propositions in a Developing Economy: The Case of Nigeria", Journal of Economic Research, 16: 291-308. [DOI:10.17256/jer.2011.16.3.003]
6. Fallahi, F. (2014). "Markov Switching Causality and the Relationship between Production and Money in Iran", Quarterly Journal of Applied Economic Studies, 3(11):107-128. (In Persian)
7. Fischer, S. 1979. "Capital Accumulation on the Transition Path in a Monetary Optimizing Model", Econometrica, 47: 1433-1439. [DOI:10.2307/1914010]
8. Friedman, M. (1969). "The Optimum Quantity of Money and Other Essays", Chicago: Aldine Publishing Company, Hawthorne. New York.
9. H0, W.M., Zeng, J. & Zang, J. (2007). "Inflation Tax and Welfare with Externality and Leisure", Journal of Money, Credit and Banking, 39 (1):105-131. [DOI:10.1111/j.0022-2879.2007.00005.x]
10. Izadkhsity, H, Samadi, S, Daliali Isfahani, R., (2015). "A Comparative Analysis of Welfare Cost of Inflation Tax in the Partiql and General Equilibrium Model", Quarterly Journal of Economic Modeling Research, 15: 43-71. (In Persian)
11. Izadkhsity, H, Samadi, S, Daliali Isfahani, R., (2015). "The Effects of Inflation Taxation on Resource Allocation and Welfare in Iran's Economy: Presentation of a Neoclassical, Endogenous Growth Model with Leisure and Production Externality", Journal of Economic Research, 5(2): 253-280. (In Persian)
12. Jabbli ameli, F. & Goudarzi Farahani, Y. (2013). "Another Confirmation of the Neutral of Money", Quarterly Journal of Economic Research and Policy, 68:109-138. (In Persian)
13. Jafari Samimi, A. & Erfani, A. (2004). "Testing Long-Term Neutrality and Super Neutrality of Money in the Iranian Economy", Journal of Economic Research, 67:117-138. (In Persian)
14. - Komijani, A, Bayat, S., & Sobhanian, S.M.H. (2011). "Neutrality and Super Neutrality Test of Money in the Long Term: A Case Study of Iran's Economy", Economic Policy, 1: 3-16. (In Persian)
15. - Moslehi, F. (1384). "The Effect of Monetary Policies in the Economy of Iran (1383-1338)", Quarterly Journal of Iranian Economy, 8(27): 133-151. (In Persian)
16. - Lioui, A., & Poncet, P. (2008). "Monetary Non-neutrality in the Sidrauski Model under Uncertainty, Economics Letters, 100: 22-26. [DOI:10.1016/j.econlet.2007.10.023]
17. -Lucas, R. E. Jr., (1972). "Expectations and the Neutrality of Money". Journal of Economic Theory, Vol. 4(2), PP.103-124. [DOI:10.1016/0022-0531(72)90142-1]
18. -Lucas, R.E. Jr., (2000). "Inflation and Welfare", Econometrica, 68(2): 247-274. [DOI:10.1111/1468-0262.00109]
19. -McCallum, B.T. (1990). "Inflation: Theory and Evidence. In: Friedman, B.M., and F.H. Hahn (eds.)", Handbook of Monetary Economics, Vol.2. North-Holland, Amsterdam, pp.963-1012.Holland, Amsterdam: 963-1012. [DOI:10.1016/S1573-4498(05)80025-6]
20. - Reis, R. (2007). "The Analytics of Monetary Non-neutrality in the Sidrauski Model", Economics Letters, 94: 129-135. [DOI:10.1016/j.econlet.2006.08.017]
21. - Motafaker Arzad, M. A, Maniei, O. & Ghaffarnejad Mehraban, A. (2011), "Intelligent Modeling of Asymmetric Effects of Monetary Shocks on Production in the Iranian Economy (Application of Artificial Neural Networks) , Journal of Economic Modeling Research, 4: 83-102. (In Persian)
22. Phetras, M. H., Tavakoliyan, H. & Maboodi, R. (2014). "Effect of Monetary Impact on Iran's Economic Growth and Inflation: Dynamic General Equilibrium Approach", Monetary and Financial Economics, New Volume, Year 21, 9: 1-29. (In Persian)
23. Pishbahar, I. & Rasouli Beiraami, Z. (2015). "Long-Term Neutrality and Super Neutrality of Money in the Iranian Economy: Total and Agricultural Sub-sectors", Quarterly Journal of Economic Research (Sustainable Growth and Development), 15th Year, 3:135-150. (In Persian)
24. Ramsey, F.P. (1928). "A Mathematical Theory of Saving", the Economic Journal, 38(152): 543-559. [DOI:10.2307/2224098]
25. Rebelo, S., & Xie, D. (1997). "On the Optimality of Interest Rate Smoothing", Working Paper, No.5947. [DOI:10.3386/w5947]
26. Robinson, Tim. (2013). "Estimating and Identifying Empirical BVARDSGE Models for Small Open Economies", Research Discussion Paper, RDP 2013-06.
27. Sargent, T. J., (1987). "Dynamic Macroeconomic Theory", Cambridge, MA: Harvard University Press.
28. Serletis, A., & Rahman, S., (2015). "On the Output Effects of Monetary Variability", Open Economies Review, 26(2): 225-236. [DOI:10.1007/s11079-014-9325-9]
29. Shahmoradi, A. & Naseri, S.A. (2009). "A Survey on the Neutrality and Super Neutrality of Money in the Iranian Economy: A Comparison of Monetary Accumulation of Simplicity and Davisia", Economic Research: 299-327. (In Persian)
30. Sidrauski, M., 1967. "Rational Choices and Patterns of Growth in a Monetary Economy", American Economic Review, 57: 534-544.
31. Tashkini, A. & Shafiee, A. (2005). "Financial, Monetary and Monetary Variables", Journal of Business, 9(35): 125-152. (In Persian)
32. Tawadros, B., (2007), "Testing the Hypothesis of Long-run Money Neutrality in the Middle East", Journal of Economic Studies, 34 (1): 13-28. [DOI:10.1108/01443580710717192]
33. Tobin, J., (1965). "Money and Economic Growth", Econometrica, 33(4): 671-684. [DOI:10.2307/1910352]
34. Turnovsky, S.J. (2000). "Fiscal Policy, Elastic Labor Supply and Endogenous Growth", Journal of Monetary Economics, 45(1), 185-210. [DOI:10.1016/S0304-3932(99)00047-1]
35. Traficante, G., (2012). "Uncertain Potential Output: implications for monetary policy in small open economy", Working Paper No. 22,
36. Walsh, C.E., (2010). "Monetary Theory and Policy", Cambridge, Massachuesetts: MIT Press, 3ed.
Send email to the article author
| Rights and permissions | |
 | This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. |
