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Monetary Policy and Fisher's Theory in Iran's Economy (Structural Vector Autoregression)

Author

Listed:
  • Shahbazi, Sanaz

    (Economics instructor, Mohaghegh Ardabili University)

  • Heydari, Hassan

    (Professor of Economics, Urmia University)

  • Nikpey Pasian, Vahid

    (Ph.D. Candidate in Economics, of Urmia University)

Abstract

The aim of the current research is to investigate the relationship between monetary policy and Fisher's theory in Iran's economy using seasonal data during the period of 1370-1400 based on the structural vector autoregression (SVAR) model using the variables of monetary policy, interest rate, inflation rate, unemployment rate and production. GDP has been estimated by the model. According to the results obtained from the variables of the current research, no significant relationship has been obtained between the monetary impulse and the interest rate in the long term, either in a positive or negative direction, the result obtained with Fisher's rule that between inflation and the real interest rate in In the long term, there is no relationship, it is aligned and in the same direction, so it can be said that in the long term, Fisher's rule is valid in Iran. Based on the results of the research, it is suggested that politicians should avoid monetary policy with the aim of influencing the interest rate and increasing production. Also, the central bank policymakers should create a logical balance between the real interest rate and economic growth by bringing the interest rate of the facilities granted to different sectors closer to each other and reducing the interest rate of the commercial sector

Suggested Citation

  • Shahbazi, Sanaz & Heydari, Hassan & Nikpey Pasian, Vahid, 2023. "Monetary Policy and Fisher's Theory in Iran's Economy (Structural Vector Autoregression)," Quarterly Journal of Applied Theories of Economics, Faculty of Economics, Management and Business, University of Tabriz, vol. 10(2), pages 215-244, September.
    • Handle: RePEc:ris:qjatoe:0313
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    More about this item

    Keywords

    Fisher theory; monetary policy; Iran; SVAR;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects

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