Parameters Uncertainty and the Effects on Monetary Policy in Iran: a New Keynesian Open Economics Approach

Document Type : Scientific paper

Abstract

In this paper analysis the effects of parameters uncertainty on designed optimal monetary policy in Iran.  For this purpose after the estimate linear and non linear Taylor monetary policy rule, coefficient of this estimation used for simulation model uncertainty during 1971-2012.  General method of moment approach is used for estimation of non-linear model.  The result show that in inflation persistence uncertainty for avoids bad outcome monetary policy in future, robust policy is optimal.  In parameter uncertainty conservatism response is good.  In uncertainty of policy effects in impulse to economic shocks, policy makers should designed less aggressively policy.  response policy to inflation and output gap in uncertainty is greater than the certainty equivalence.  In uncertainty of inflation targeting coefficient of optimal impulse is greater than the other uncertainty.

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References

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History

  • Receive Date: 17 January 2012
  • Revise Date: 28 January 2014
  • Accept Date: 07 May 2014

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