IDEAS home Printed from https://ideas.repec.org/a/mbr/jmbres/v13y2020i44p297-340.html
   My bibliography  Save this article

Investigating the Asymmetric Relationship between Financial Instability, Monetary Policy and Economic Growth in Iran (in Persian)

Author

Listed:
  • Fattahi, Fahmide

    (Urmia University)

  • Shahbazi, Kiumars

    (Urmia University)

  • Hekmati Farid, Samad

    (Urmia University)

Abstract

This study investigated the asymmetric effects of financial instability shocks on economic growth and monetary policy shocks on financial instability in Iran. For this purpose,data 1991:3 to 2017:1 and nonlinear auto-regressive distributed lag (NARDL) approach has been used. For this purpose, three models have been estimated. In the first model, the asymmetric effects of fiscal instability shocks on economic growth are studied and in the next two models, the asymmetric effects of monetary policy shocks are investigated. The results of the first model indicate positive financial instability shock has a negative effect and negative shock has a positive effect on economic growth. Also, in the second model, the results indicate that a positive interest rate shock has a negative effect and a negative interest rate shock has a positive effect on financial instability. The results of the third model estimate indicate that a positive Liquidity growth shock has a positive effect and a negative Liquidity growth shock has a negative effect on financial instability. The results of the effect of government spending on financial instability in the second and third models are different due to the application of different monetary policy tools in the two models, Therefore, it can be said that the effect of government spending on financial instability can vary depending on the type of monetary policy. The results of the Wald test show that the effects of financial instability shocks on economic growth and the effects of monetary policy shocks on financial instability in the short run and long run is asymmetrical. Also, the effect of Liquidity growth on financial instability is asymmetric in the short run but symmetric in the long run.

Suggested Citation

  • Fattahi, Fahmide & Shahbazi, Kiumars & Hekmati Farid, Samad, 2020. "Investigating the Asymmetric Relationship between Financial Instability, Monetary Policy and Economic Growth in Iran (in Persian)," Journal of Monetary and Banking Research (فصلنامه پژوهش‌های پولی-بانکی), Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 13(44), pages 297-340, August.
  • Handle: RePEc:mbr:jmbres:v:13:y:2020:i:44:p:297-340
    as

    Download full text from publisher

    File URL: http://jmbr.mbri.ac.ir/article-1-1304-en.pdf
    Download Restriction: no

    File URL: http://jmbr.mbri.ac.ir/article-1-1304-en.html
    Download Restriction: no

    File URL: http://jmbr.mbri.ac.ir/article-1-1304-fa.html
    Download Restriction: no
    ---><---

    More about this item

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G01 - Financial Economics - - General - - - Financial Crises
    • G2 - Financial Economics - - Financial Institutions and Services

    Statistics

    Access and download statistics

    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:mbr:jmbres:v:13:y:2020:i:44:p:297-340. 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: M. E. (email available below). General contact details of provider: https://edirc.repec.org/data/mbcbiir.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.