Analysis the Non-Neutrality of Monetary Policy Effects through Nominal Interest Rate in the Generalized Sidrauski's Model in Iran's Economy: Optimal Control Approach

Sidrauski's (1967) model of money in the utility function in the framework of a neoclassical growth model, has analyzed the role of money in the economy. His conclusions suggest that money is super-neutral in the steady state. The basic research problem is generalized Sidrauski's model according to Reis (2007). Then, using optimal control approach, analysis the non-neutrality of monetary policy effects through nominal interest rate in the generalized Sidrauski's model. The results of calibration and sensitivity analysis of macroeconomic variables in Iranian economy indicate that as long as demand for real money balances elastic regard to nominal interest rate in non-separation utility function, monetary policy is not neutral in steady state. Therefore, a monetary policy that leads to a 3.6% decline in nominal interest rate growth, causing an increase in real money balances from 9.82 to 10.63. Finally, increased levels of capital per capita, output per capita and consumption per capita from 8.46, 2.90 and 2.38 to 9.42, 3.07 and 2.88. In addition, simulated results during the (1434-1344) in Iranian economy indicate that monetary policy, which leads to lower nominal rates, has increased the level of capital, production and consumption per capita continually.