Monetary Policy Effects on Energy Supply and Demand and Macroeconomic Variables with SUR

This paper uses from a New Keynesian model with microeconomic approach to survey effective channels of monetary policy in Iran on supply and demand of energy (oil and natural gas). This paper surveys effective factors on energy supply and demand in Iran and uses from data of 1969-2014 and SUR method for estimation. For analysis effects of energy price on macroeconomic variables from demand side, uses from IS curve and for supply channel, Philips curve is used. Estimation results reveal that monetary policy is affected on energy supply and demand directly with interest rate channel and indirectly from energy price which it's effect on energy demand is more than supply. As estimation results of Philips curve and IS curve, energy price has meaningful effect on inflation and production in Iran. Which negative effect of energy price increasing on production is more than inflation.