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Short-Run and Long-Run Effects of Monetary Policy on GDP in Iran

Author

Listed:
  • Reza Gholami Jamkarani
  • Mosa Mohammadi
  • Ali Laalbar
  • Abbas Rezazadeh Karsalari

Abstract

In this paper, we investigated the short-run and long-run effects of monetary policy on GDP have been investigated by co-integration analysis in Iran economy during the period 1972-2015. We used Johansen cointegration methods to demonstrate long-term relationship between the variables. The results showed that the Contractionary monetary shocks, has low effects on output whereas the effects of expansionary monetary shocks are neutral. The effects of expansionary monetary shocks after a first lag have significant effects on increasing output. Among the control variables, the investment ratio, inflation, government expenditures, oil revenues and coefficient of exchange rate have significant expected effects on production growth. In addition, there is a long-run relationship between money supply, inflation and output.

Suggested Citation

  • Reza Gholami Jamkarani & Mosa Mohammadi & Ali Laalbar & Abbas Rezazadeh Karsalari, 2016. "Short-Run and Long-Run Effects of Monetary Policy on GDP in Iran," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 6(3), pages 89-95, July.
    • Handle: RePEc:hur:ijaraf:v:6:y:2016:i:3:p:89-95
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    References listed on IDEAS

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