There have been two broad theories of inflation, namely the demand-pull theory of inflation (that is nowadays mainly the monetary theory of inflation) and the cost-push theory of inflation. The mainstream macroeconomics views inflation as a monetary phenomenon in the long run. Iran has experienced double-digit rates of inflation for about four decades. Our main aim is an explanation for the lon...

The objective of this paper is to reexamine the monetary mechanism, that is the mechanism through which the monetary authority by controlling certain financial variables achieves (more or less) effective control over nominal income. We propose to argue that the view of the monetary mechanism which has been widely accepted, at least until very recently, by both monetarists and Keynesians and whi...

a r t i c l e i n f o JEL classification: E31 E52 E61 F33 F41 Keywords: Currency union Optimal monetary policy Redistributive monetary policy Financial frictions Interest rate spreads Spread-adjusted Taylor rule We introduce " financial imperfections " – asymmetric net wealth positions, incomplete risk-sharing, and interest rate spreads across member countries – in a prototypical two-country cu...

This paper characterises optimal monetary policy in an economy with endogenous …rm entry, a cash-in-advance constraint and preset wages. Firms must make pro…ts to cover entry costs; thus the markup on goods prices is e¢cient. However, because leisure is not priced at a markup, the consumption-leisure tradeo¤ is distorted. Consequently, the real wage, hours and production are suboptimally low. D...

This paper examines downward price rigidity in Iranian house market and discusses whether this characteristic would result in an asymmetric relationship between house price and monetary policy. To test the downward house price rigidity the threshold GARCH model is employed. The asymmetric adjustment to monetary policy is examined using the asymmetric cointegration and error correction models. T...

Since Keynes no economist would deny that expectations under uncertain conditions matter for the conduct of monetary policy, but still opinions about their formation are diverse. We build a hybrid New Keynesian Framework to analyze the in‡uence of model uncertainty on optimal interest rates under di¤erent degrees of rational forward-looking behavior, using recently developed robust control tech...

This study aimed to examine the effects of monetary policy on macroeconomic variables with regard to the collateral constraint. For this purpose, a dynamic stochastic general equilibrium (DSGE) was developed for Iran’s economic status. Two scenarios were considered as to account for the behavior of the central bank. In the first scenario, the monetary rule is modeled according to the GDP gap an...

cycles fluctuations in housing investment and national economy, variation in consumers and producers behavior, deviation in allocation of economic resources, the aggravation of capital transfer in asset market, the variation of income distribution pattern and imbalance in resource and expenses are the consequences of fluctuations in housing prices. these consequences and its control and recogni...