Investigating the Role of Monetary Policy Uncertainty in its Effectiveness on Production and Inflation in Iran

The study of the impact of monetary policy on macroeconomics has a special place in the study of monetary economics. Meanwhile, after the global financial crisis, some studies have addressed the importance of uncertainty in the effectiveness of monetary policy. Given that Iran's economy is subject to numerous internal and external shocks, it is important to be aware of the role of uncertainty in the impact of monetary policy. Accordingly, the present study uses the Threshold Vector Autoregressive (TVAR) approach to examine the effectiveness of monetary policy on inflation and economic growth in Iran, considering the uncertainty during the years 2004-2018. The results showed that the effect of monetary policy on economic growth is strongly dependent on monetary policy uncertainty. As the uncertainty intensifies, the impact of monetary policy diminishes and is unpredictable. At the same time, the impact of inflation does not depend on the state of policy uncertainty. The analysis of the results provided important policy implications