Economics, Econometrics and Finance
7 years ago

Implicit inflation targeting in Iran leads to discretionary monetary policy dominance.

Journal of Monetary & Banking Research
Optimal, Discretionary and Rule-based Monetary policy in Achieving 5-year Development Plans’ Inflation Target: A Dynamic Stochastic General Equilibrium Approach
Hossien tavakolian

Paper Summary

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The study created a model to analyze how monetary policy in Iran affects inflation. They found that although there are inflation targets in development plans, there is no commitment to them. The results suggest that in the late 70s and early 80s, there was a rule for monetary policy, with the implicit target being higher than in the development plans. Overall, the study indicates that monetary policy in Iran has mostly been conducted in a discretionary manner.