Supply of Money in Iran

Document Type : Research Paper

Authors

1 Associate Professor'University of Jamran'Ahvaz

2 MS

Abstract

For each economy in which monetary policy is relatively independent, monetary base is controlled by the central bank to affect the economic variables, preserve the value of money and to achieve economic stability. Supply of money, however, is not just an exogenous variable to be determined by central bank, but it is considered to be an endogenous variable too.  The endogeneity of money supply is a very important factor which affects the efficiency of monetary and fiscal policies. The present article aims at estimating the supply of money using autoregressive distributed lag (ARDL) during 1982-2005.  The findings of the research show that long term and short term interest rates have significantly positive effects on supply of money in Iran.  This indicates that banking activity is the main factor affecting the volume of money in Iran through variation in free reserves. Based on this estimation, it is concluded that in about two and half years the divergence caused by the initial "shock" would be corrected.

Keywords

References

 
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History

  • Receive Date: 28 December 2022
  • Accept Date: 28 December 2022

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