abstract: central banks have long been interested in obtaining precise estimations of money demand given the fact that the evolution of money demand plays a key role over several monetary variables. one implication of currency substitution is that the exchange rate could serve as another determinant of the demand for money. due to the recent currency crisis in iran, it would be important to inv...

the purpose of the paper is to survey and discuss inflation targeting in framework of monetary policy rules. this study design an optimal economy model for iran which compare different cases of domestic and cpi inflation targeting, strict and flexible inflation targeting.in relation to this, the optimal monetary policy rule was designed using three constraints neo-keynesian phillips curve, aggr...

We study optimal fiscal and monetary policy in an environment where explicit frictions give rise to valued money, making money essential in the sense that it expands the set of feasible trades. Our main results are in stark contrast to the prescriptions of earlier flexible-price Ramsey models. The two most important findings that emerge from our work are that the Friedman Rule is typically not ...

The conduct of monetary policy in an oil economy with a managed floating exchange rate regime can be challenging in an environment of fiscal dominance and incomplete transition to a market economy. The Five-Year Development Plans provide a natural benchmark against which to assess monetary policy performance in Iran. Price stability has proved elusive, with liquidity growth targets constan...

T here is always uncertainty about the soundness of an economic model’s structure and parameters. Therefore, central banks normally face with uncertainty about the key economic explanatory relationships. So, policymaker should take into account the uncertainty in formulating monetary policies. The present study is aimed to examine robust optimal monetary policy under uncertainty, by ...

In developing countries, weak institutional quality can increase the probability of applying discretionary policies and can have a great impact on their double-digit inflation. Surico (2008) calculated inflation bias, but he considered just monetary policy and he did not pay attention to the institutions. Therefore, we design a model which considers the discretion in monetary and fiscal policie...

This paper discusses some operational issues regarding the design of monetary frameworks in general and inflation targets in particular. Among inflation targeters,1 these issues are well-known and manifold (see, inter alia, Yates (1995), McCallum (1995), Debelle (1997), Siklos (1997) and the country contributions in the volumes by Haldane (1995) and Leiderman and Svensson (1995)). They include:...