Analyzing Fiscal and Monetary Policies in the form of an Open DSGE Model for the Iranian Economy

In this study, we analyze the fiscal and monetary policies in Iran using an open DSGE model in which the central bank’s policy is in the form of a McCallum rule. We estimate the structural parameters using the Bayesian method and the quarterly time series data for the period 1369 – 1394 (1990-2015).  To check the validity of the results, we use the Monte Carlo Markov Chain statistics, Gelman – Brooks statistics, and also compare prior and posterior distribution functions. The results indicate a good fit of the model with the data . The simulation results also show that fiscal and monetary policies have real impacts on variables in the short run.