Volume 3, Issue 9 (10-2012)                   jemr 2012, 3(9): 1-19 | Back to browse issues page

XML Persian Abstract Print


Download citation:
BibTeX | RIS | EndNote | Medlars | ProCite | Reference Manager | RefWorks
Send citation to:

Taghinezhadomran V, Bahman M. Extended Taylor Rule: Empirical Evidence from Iran 1979-2008. jemr 2012; 3 (9) :1-19
URL: http://jemr.khu.ac.ir/article-1-465-en.html
1- Mazandaran University , omran@umz.ac.ir
2- Mazandaran University
Abstract:   (12797 Views)

  The ultimate goals of the monetary policy are price stability and the output growth. Monetary policy instruments are interest rate and the growth rate of monetary base. One of the well-known rules in conducting monetary policy is Taylor rule, through which, central banks change the interest rate while taking into account the output and inflation distortions. There are two problems with applying Taylor rule in Iran: First, the weak micro-foundation of the rule and second, according to this rule specially in the short run, instead of interest rate the policy variable is the growth rate of the monetary base. This research extends Taylor rule by explaining micro-foundation of the rule. So, using Generalized Method of Moments (GMM), we investigated the consistency of the Iranian central bank’s reaction function with extended Taylor rule in the period 1979- 2008. The empirical results show that although monetary authorities react appropriately with respect to output distortion, but their reaction is not appropriate with respect to inflation distortion.

Full-Text [PDF 872 kb]   (5427 Downloads)    
Type of Study: توسعه ای | Subject: پولی و مالی
Received: 2012/06/2 | Accepted: 2013/02/24 | Published: 2013/02/24

Add your comments about this article : Your username or Email:
CAPTCHA

Send email to the article author


Rights and permissions
Creative Commons License This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

© 2024 CC BY-NC 4.0 | Journal of Economic Modeling Research

Designed & Developed by : Yektaweb