IDEAS home Printed from https://ideas.repec.org/a/eut/journl/v23y2019i1p1.html
   My bibliography  Save this article

The Monetary Policy, Credit Constraint and Spatial Distribution of Economic Activity: A Contribution of New Economic Geography

Author

Listed:
  • Ahmad Jafari Samimi

    (Faculty of Economics & Administrative Sciences, University of Mazandaran, Babolsar, Iran.)

  • Saeed Rasekhi

    (Faculty of Economics & Administrative Sciences, University of Mazandaran, Babolsar, Iran.)

  • Seyed Peyman Asadi

    (Faculty of Economics & Administrative Sciences, University of Mazandaran, Babolsar, Iran.)

Abstract

This paper investigates the effect of monetary policy on the distribution of economic activity and agglomeration economies within a country. The considered channel for this effectiveness is the availability of credit to firms in various regions and the effects on the labor and consumer welfare. For this purpose, data for manufacturing firms located in 30 different provinces in Iran during 2007 and 2014 gathered. The empirical results from spatial panel data show that beside conventional channel of effectiveness through consumer and labor force utility function, regional monetary policy implication through uneven distribution of regional loanable banking fund seems to be substantial centripetal force. In terms of most well-known NEG variable, uneven regional accessibility of credit market has opposite regional implication as trade freeness. While the former leads to more concentration of economic activity across space, the latter tends to drive dispersion. It is assumable that monetary policy reduce the impact of credit constraints on firms but the degree of credit availability in regions is a significant driver for concentration of economic activity. The result shows the importance of accessibility to banking loans on distribution of economic activities within the country.

Suggested Citation

  • Ahmad Jafari Samimi & Saeed Rasekhi & Seyed Peyman Asadi, 2019. "The Monetary Policy, Credit Constraint and Spatial Distribution of Economic Activity: A Contribution of New Economic Geography," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 23(1), pages 1-27, Winter.
    • Handle: RePEc:eut:journl:v:23:y:2019:i:1:p:1
    as

    Download full text from publisher

    File URL: ftp://80.66.179.253/eut/journl/20191-1.pdf
    Download Restriction: no
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eut:journl:v:23:y:2019:i:1:p:1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: [z.rahimalipour] (email available below). General contact details of provider: https://edirc.repec.org/data/fecutir.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.