This paper investigates the role of beliefs over monetary policy in propagating the effects of monetary policy within the context of a dynamic, stochastic general equilibrium model. In our model, monetary policy periodically switches between low and high money growth regimes. When individuals are unable to directly observe the current regime, they will assign some probability to the low money g...

Since at least Engle (1982) and Stock and Watson (2002), we know that the conditional variance of future output and inflation evolves over time. However, in these seminal contributions, the risk of real activity and inflation is implicitly considered as symmetric. In this paper, we investigate the time evolution of the conditional distribution of macroeconomics variables with a special interest...

I study how the general and specific details of a micro founded monetary framework affect the determination of policy when the government has limited commitment. The conduct of policy depends on the interaction between the incentive to smooth distortions intertemporally and a time-consistency problem. In equilibrium, fiscal and monetary policies are distortionary, but long-run policy is not aff...

Under certain monetary-fiscal regimes the risk of default and thus the emergence of sovereign risk premiums are inevitable. This paper argues that in this context even small differences in the specification of monetary policy can have enormous effects on the equilibrium behavior of default rates and risk premiums. Under some monetary policy rules studied, the conditional expectation of default ...

This paper studies the nature of monetary policy with …nancial intermediaries that provide loans for working capital in a cash-in-advance model with indivisible labor. Monetary policy occurs through money injections either directly to families or to …nancial intermediaries. Injections to families produce an in‡ation tax while injections directly to …nancial intermediaries provide an in‡ation su...

this article examines the basic assumption of rational expectations hypothesis on iran's economy from 1966 to 2003. this assumption suggests the neutrality or ineffectiveness of money policy on the development of real variables of production and employment. the results from estimation of production equation do not support the significant influence of unanticipated component of money growth...

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In this study, a macro-economic model consisting of twelve behavioral equations and fourteen identity equations was estimated with the aim of investigating the effectiveness of monetary and fiscal policies set out in the fourth and fifth development plans. In the estimated model, the variables of development expenditures, current expenditures and tax revenues are used as fiscal policy tools and...

The aim of the present study is to detect the chaotic behavior in monetary economic relevant dynamical system. The study employs three different forms of Taylor rules: current, forward, and backward looking. The result suggests the existence of the chaotic behavior in all three systems. In addition, the results strongly represent that using expectations in policy rule especially rational expect...

In this study, we examined the effects of monetary policy shocks on the performance of the Iranian macroeconomy and the banking system, under the different situations of the Basel II and III capital requirements regulations. By developing a DSGE Model and according to its structural shocks, four observable variables including output gap, bank capital adequacy, inflation, and money base growth r...