analysis of monetary and budgetary shocks implications in the iranian economy using a dsge model

the purpose of this paper is to examine the effects of monetary, fiscal and oil revenue shocks on macroeconomic variables in the framework of rule and discretionary monetary policy. to end this, we use a new keynesian dynamic stochastic general equilibrium (dsge) model. given the dominant role of oil in the country, we consider the role of oil shock in the model through different channels. the simulation results suggest that monetary shocks have a significant effect on inflation but the effectiveness of monetary shocks is different in rule and discretionary policy. government expenditure shocks motivate variables in the real sector, but government development budget has not increased private investment instantly, it will rise slightly with lags. this may be due to different reasons such as long lasting state projects and low precision in the project selection. due to dependency of iranian economy on petro dollars, an oil shock has a big impact on all variables. a positive oil shock increases production, consumption and employment. however, it raises inflation as well.