The Dynamic Regional Effects of Monetary Policy on Employment in Iran(TVP-FAVAR Approach)

The regions in a country respond differently to monetary shocks. ،This phenomen is possible in Iran' economy. With attention to the importance of this phenomen, the purpose of this paper is to analyze the effects of monetary shocks on employment in regions with non-systematic mechanism of monetary transmission. To achieve this purpose, we used TVP-FAVAR approach to analysis of monetary shocks in the thirty provinces over 1384:1- 1394:4. The results show that there are different responses to monetary shocks in Iranian provinces. Also, the response of each province is different in terms of time, and the economic conditions play main roles in response of province to monetary shocks. The findings of this paper represent evidences of asymmetric effects of monetary policies in Iranian regions. We suggest the central bank should consider the regional differences in policy making. This considering can help to incresese the efficiency of monetary policies in regional level.