The effects of monetary policies on consumption behaviors of rural households in Iran

The main objective of this study is to assess the effects of monetary policies on consumption behaviors of rural households in Iran, using models based on Euler equations and OLS and IV approaches. Results showed that there is no specific pattern for the relationship between consumption growth of rural households and interest rate. In other words, there are no interactions between monetary policies and rural household's consumption. Also, consumers with liquidity constraint were recognized to perform a higher proportion compared to those whose consumption is affected by interest changes. Furthermore, precautionary savings is dominant on consumption behavior of rural households.