Sectoral Impacts of the Monetary Policy in the Framework of Non-Usury Banking

Monetary policy is one of the most important instruments for controlling the demand side of economy and so it is necessary to investigate the impacts of it on the key economic variables. There is an agreement between economists about monetary policy real effects in the short run, but they believe that it is neutral in the long run.According to the monetary transmission channels and the differences between economic sectors, it is expected that economic sectors show unequal responses to a monetary policy shock.In the most of theoretical and empirical researches, impacts of monetary policy on macro variables such as GDP and CPI are discussed and other aspects of this policy are ignored. Since usury is forbidden and the law of non-usury banking operation is exercised in Islamic Republic of Iran, we use monetary base as a monetary policy variable instead of interest rate which is used in the studies on this field. In this research, the sectoral impacts of an expansionary monetary policy shock are studied by the use of SVAR model and according to the quarterly data in period 1990-2008.Conclusions of this research show that responses of economic sectors to a monetary policy shock are different and industry sector has the largest and fast response. The share of monetary policy shock in variation of industry sector's value added is more than the share of this shock in variation of two other sector's value added, too. So the sensitivity of industry sector with respect to the monetary policy is more than the agriculture sector and service sector in Iran economy.