Appropriate Monetary and Financial Policy Framework to Achieve Inflation Targeting with an Emphasis on How to Manage Oil Revenues in Iran: an Approach DSGE

Pari Jafarielilab (), Jafar Haghighat (), Hossein Asgharpour () and Behzad Salmani ()
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Pari Jafarielilab: PhD student in Economics, University of Tabriz
Jafar Haghighat: professor of economics, University of Tabriz
Hossein Asgharpour: professor of economics, University of Tabriz
Behzad Salmani: professor of economics, University of Tabriz

Quarterly Journal of Applied Theories of Economics, 2022, vol. 9, issue 2, 223-244

Abstract: The aim of this paper is examining appropriate structures in order to achieve the objectives of monetary and fiscal policy in the Iranian economy. The behavior of monetary and fiscal policymakers was derived using dynamic optimization and game theory techniques trough defining objective functions and policy makers’ constraints under two basic policy making approaches: commitment and discretionary. findings showed that,Regardless of committed or discretionary policymaking approach, fiscal policy has procyclical behavio. findings showed that, the hypothesis that oil revenues are only reason of fiscal dominance in Iranian economy is rejected and policy maker s commitment is necessary condition and fiscal discipline is sufficient condition for independence of monetary policy.

Keywords: dynamic stochastic general equilibrium; discretionary policymaking; committed policymaking; game theory; Bayesian estimation method. (search for similar items in EconPapers)
JEL-codes: E52 E61 E63 (search for similar items in EconPapers)
Date: 2022
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