Analyzing the Monetary Policy in Iran Economy by Using a Dynamic Stochastic General Equilibrium Model

This paper designed a dynamic stochastic general equilibrium (DSGE) model for studying Iranian monetary policymaking, in which a policymaker can decide between inflation and exchange rate targeting to organize a monetary policy. Central bank’s tools to achieve these two goals are the control of domestic credits and intervention in exchange market. The results of our calibration represent that, in case of oil revenue shock, inflation targeting scenario makes less movement in consumption, non-oil production, employment, inflation and money. In case of technology shock, there is no special difference between two scenarios. But, inflation targeting makes less movement in non-oil production and inflation.