Analysis of Monetary Policy Making Model in Iranian Economy

Monetary policies take place for different purposes; including price stability, economic growth and employment. Also, presenting value of national money and balance of payment are important. The vague is that: what targets policy makers consider Important in performing the monetary policies.In this research, the final target about monetary policies in Iran is evaluated. Based on central bank policy reaction function in form of DCt (monetary policy reaction function) as central bank internal asset It is estimated according to economic theories and Iran economic structure as a function of FA,ER,CPI,GDP for the years 1352-1386 (1973-2007) by using co-integration procedure and Johanson & Juselius method The results show that central bank foreign assets and market base currency rate effect positively and significantly on policy reaction function and actual domestic gross production variable and consumer price indicator has negative and significant effect on DCt. Also as a general conclusion it is inferred that policy makers follow a consistent and persistant policy. In fact, during this period, the goal of central bank was the stability of prices and preservation of domestic national money value in Iranian economy.