Studying the Effects of Hording on Production and Welfare Designing a Dynamic Stochastic General Equilibrium Model for Iran's Economy

Hording is forbidden in Islam. But from the aspect of economics, it seems that Keynes is one of the first economists who have studied the effects of hording. However, Keynes, New Keynesians and New Classics concentrate on only monetary aspect of hording. They haven’t studied the other aspects of hording such as capital hording. Furthermore, there is no study about the effects of hording using an economic model. In this paper we try to build a theoretical model which shows the effects of money and capital hording. Money hording in this paper is due to Keynes’ viewpoint to money speculation and physical capital hording is near to stagnant and waiting lands, buildings and equipment. In this study we use Dynamic Stochastic General Equilibrium approach (DSGE) in two stages. First, we design a standard four sector model containing oil revenue for Iran’ economy and then. After all, we use the model to calibrate and simulate Iran’s economy. Results show that hording has negative effect on real variables such capital stock, consumption and output. For prompting output and social welfare it needs that monetary and fiscal authority design policies for reducing hording. According to findings, imposing tax on capital assets and reducing bank rate of interest are policy suggestions