Oil Price Shocks and Monetary Policy in Iran: The New Keynesian Approach (in Persian)

Maryam Faraji (), Zahra Afshari () and Ilnaz Ebrahimi ()
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Maryam Faraji: Iran
Zahra Afshari: Iran
Ilnaz Ebrahimi: Iran

Journal of Monetary and Banking Research (فصلنامه پژوهش‌های پولی-بانکی), 2015, vol. 7, issue 22, 533-568

Abstract: 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.

JEL-codes: C3 C6 D5 E5 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:mbr:jmbres:v:7:y:2015:i:22:p:533-568

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