Informal sector stability boosts monetary growth rules in emerging economies.
The article explores how different monetary policies affect an economy with informal sectors, like Iran. By analyzing data from Iran and the US, the researchers found that using a Taylor-type money growth rule, rather than interest rates, leads to stability and predictability in the economy. This stability holds regardless of the level of asset market participation. The study also highlights the importance of considering factors like informal labor sectors and fiscal dominance when designing monetary policies for emerging economies.