The study explores how Armenia's economy responds to different types of monetary policies during different phases of the business cycle. They found that tight monetary policies lead to bigger drops in output compared to increases from loose policies. Expansionary policies create more inflation. The researchers used a model to show that these effects are due to various economic frictions and market dynamics. In a demand-driven economy, aggressive contractionary policies speed up output decline with less impact on inflation. In a supply-driven economy, aggressive policies accelerate output decline with little effect on inflation.