Study of Monetary Shocks on Investment in Agricultural Sector of Iran

Monetary policy is one of the macroeconomic variables that Have impect on agricultural investment. In this study, The monetary shocks have been defermined by Hodryk-Prescott Filter, and then the effect of monetary shocks on agricultural investment has been studied by the use of Auto Regressive Distributed Lag Model for the period of 1974 to 2011. According to results GDP, has positive effect and monetary shocks, credit to the agricultural sector and inflation have negative effect on agricultural investment in Long-run. Error correction model shows that in the short run ,credit and inflation have had negative effect and monetary shocks and GDP, have had positive effect on agricultural investment. Error correction term indicates that 44% of disequilibrium in agricultural investment in each period is adjusted in the next period. Therefor, as agricultural investment is important in planning. It is proposed that the government support investing in agricultural sector against monetary shocks.