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:: Volume 25, Issue 83 (quartery journal of Economic Research and Policies 2017) ::
3 2017, 25(83): 145-181 Back to browse issues page
Calculation of Optimal Monetary Policy by Considering the Current Account and Exchange Rate Fluctuations (Bayesian Approach)
Abstract:   (837 Views)
This research is to design a New Keynesian DSGE model in an open economy which could be capable of Calculating optimal monetary policy rule in the face of different shocks (oil revenue and technological shocks), according to the dynamics of the current account and exchange rate fluctuations. In this study, after designing the model, Current account is derived and the model coefficients are calculated through the Bayesian approach. Then the three principals are introduced to the model and dynamism of the variables is investigated in the form of impulse response functions. The optimal policy rule is the policy, which minimizes the welfare loss function in the face of every shock. The results show that the optimal policy rule in the face of oil revenue shock and technological shock will be inflation and exchange rate rule and inflation targeting rule respectively. Finally, the immediate response (In the initial moments after entering shock) of the current account and the trade balance increased in the face of oil shock with the use of the rule of inflation and exchange rate comparing to the other rules.
 

Keywords: Dynamic Stochastic General Equilibrium, Optimal Monetary Policy, Current Account, Exchange rate fluctuations  
Full-Text [PDF 1113 kb]   (362 Downloads)    
Type of Study: Applicable | Subject: Special
Received: 2017/03/13 | Accepted: 2017/11/12 | Published: 2017/11/12
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Calculation of Optimal Monetary Policy by Considering the Current Account and Exchange Rate Fluctuations (Bayesian Approach) . 3. 2017; 25 (83) :145-181
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Volume 25, Issue 83 (quartery journal of Economic Research and Policies 2017) Back to browse issues page
فصلنامه پژوهشها و سیاستهای اقتصادی Journal of Economic Research and Policies
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