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

Author

Listed:
  • Jafarielilab, Pari

    (PhD student in Economics, University of Tabriz)

  • Haghighat, Jafar

    (professor of economics, University of Tabriz)

  • Asgharpour, Hossein

    (professor of economics, University of Tabriz)

  • Salmani, Behzad

    (professor of economics, University of Tabriz)

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.

Suggested Citation

  • Jafarielilab, Pari & Haghighat, Jafar & Asgharpour, Hossein & Salmani, Behzad, 2022. "Appropriate Monetary and Financial Policy Framework to Achieve Inflation Targeting with an Emphasis on How to Manage Oil Revenues in Iran: an Approach DSGE," Quarterly Journal of Applied Theories of Economics, Faculty of Economics, Management and Business, University of Tabriz, vol. 9(2), pages 223-244, September.
    • Handle: RePEc:ris:qjatoe:0273
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    More about this item

    Keywords

    dynamic stochastic general equilibrium; discretionary policymaking; committed policymaking; game theory; Bayesian estimation method.;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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