Financial monetary economy
Alireza Abroud; Abdonaser Derakhsan; Farshid Ahmadi Farsani
Abstract
این پژوهش با هدف بررسی رابطه بین سرمایه عملیاتی، نگهداری وجوه نقد و عملکرد مالی شرکت‌های پذیرفته شده در بورس اوراق بهادار تهران انجام شده است. سوال اصلی پژوهش این است ...
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این پژوهش با هدف بررسی رابطه بین سرمایه عملیاتی، نگهداری وجوه نقد و عملکرد مالی شرکت‌های پذیرفته شده در بورس اوراق بهادار تهران انجام شده است. سوال اصلی پژوهش این است که آیا سرمایه عملیاتی و نگهداری وجوه نقد بر عملکرد مالی این شرکت‌ها تاثیر معناداری دارند؟ در این پژوهش، فرضیه‌هایی مبنی بر تاثیر مثبت و معنادار سرمایه عملیاتی و نگهداری وجوه نقد بر عملکرد مالی شرکت‌ها مطرح شده است. برای آزمون این فرضیه‌ها، از داده‌های مالی 110 شرکت پذیرفته شده در بورس اوراق بهادار تهران در یک دوره زمانی 10 ساله از سال 1391 تا سال 1400 استفاده شده است. جمع‌آوری داده‌ها از اسناد سازمان بورس و با کمک نرم‌افزار اکسل تحلیل داده‌ها با استفاده از نرم‌افزار آماری استاتا صورت گرفته است. در تجزیه و تحلیل داده‌ها از روش رگرسیون چند متغیره با داده های ترکیبی بهره گیری شده است. آزمون‌های چاو و هاسمن برای انتخاب الگوی مناسب برآورد مدل‌ها و آزمون‌های والد تعدیل‌شده، والدریج و پسران نیز برای بررسی فروض کلاسیک رگرسیون استفاده شده است.به لحاظ نظری، این پژوهش به غنی‌سازی ادبیات موجود در زمینه مدیریت مالی و عملکرد شرکت‌ها کمک می‌کند و از نظر کاربردی، نتایج این پژوهش می‌تواند برای مدیران شرکت‌ها، سرمایه‌گذاران، تحلیلگران بازار سرمایه و سیاست‌گذاران مفید باشد تا تصمیمات بهتری اتخاذ کنند. نتایج حاصل از پژوهش بیانگر این است که سرمایه عملیاتی و نگهداری وجوه نقد بر عملکرد مالی شرکت های پذیرفته شده در بورس اوراق بهادار تهران تاثیر مثبت و معناداری دارد.
Financial monetary economy
Mojtaba Hajizadeh; mehrzad ebrahimi; hashem zare
Abstract
In this study, the optimal monetary policy was determined to reduce the negative effects of the shock caused by the spread of the corona disease on value added of economic sectors (agriculture, industry and mine and services) in Iran. For this purpose, the social accounting matrix (SAM) of the Islamic ...
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In this study, the optimal monetary policy was determined to reduce the negative effects of the shock caused by the spread of the corona disease on value added of economic sectors (agriculture, industry and mine and services) in Iran. For this purpose, the social accounting matrix (SAM) of the Islamic Parliament Research Center and the central bank's input-output table were used to collect data. Also, to analyze the data, the recursive dynamic computable general equilibrium (RDCGE) model and MATLAB software were used. The results showed that among the economic sectors, the service sector is more vulnerable to the shock caused by the spread of the Corona virus. Also, adoption an expansionary monetary policy equivalent to a 5% reduction in the legal reserve rate reduces the negative effects of the shock caused by the outbreak of the Corona virus on value added of studied economic sectors compared to the base scenario (not adopting a monetary policy). Also, adopting an expansionary monetary policy equivalent to a 10% reduction in the legal reserve rate reduces the negative effects of the shock caused by the outbreak of the Corona virus on the value added of studied economic sectors compared to the scenario 1 (5% reduction in the legal reserve rate) and adopting an expansionary monetary policy equivalent to a 20% reduction in the legal reserve rate reduces the negative effects of the shock caused by the spread of the Corona virus on the value added of studied economic sectors in comparison to scenario 2 (10% reduction in the legal reserve rate). Based on this, it is suggested to the monetary authorities to adopt an expansionary monetary policy under similar conditions so that commercial banks can provide facilities to households (in order to stimulate demand and prevent the reduction of production of goods and services) and producers (in order not to lay off or adjust the workforce) in order to reduce the value added of economic sectors.
Financial monetary economy
Seyyed Abdollah razavi; mahdis moraveji
Abstract
Banking facilities in developing countries play a pivotal role in financing and economic growth. Additionally, the strategic management of working capital is crucial for reducing credit risk and enhancing financial flexibility. While credit facilities are vital to the economy, they require effective ...
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Banking facilities in developing countries play a pivotal role in financing and economic growth. Additionally, the strategic management of working capital is crucial for reducing credit risk and enhancing financial flexibility. While credit facilities are vital to the economy, they require effective risk management. Customer evaluation, portfolio monitoring, and managing systematic risks and non-performing loans are essential for maintaining financial stability.This study utilizes the PMG/ARDL model to examine the impact of working capital facilities on credit risk at Bank Melli Iran, seeking to determine whether these facilities influence credit risk and if proper management can mitigate such risks. The research analyzed monthly data from 35 regional management offices and ten independent branches of Melli Bank of Iran over 26 months (from April 2022 to May 2024). Working capital facilities were aggregated from data in the industrial, mining, and agricultural sectors, and credit risk was calculated by weighting three categories of non-performing loans (overdue, past due, and doubtful receivables). The stationarity analysis showed that both variables are stationary at the level. The findings indicate that the coefficient of the impact of working capital facilities on credit risk is significant. Therefore, an increase in working capital facilities, on average and assuming other conditions remain constant, reduces credit risk and decreases loan defaults.
Financial monetary economy
alireza tamizi
Abstract
In different production sectors, in addition to the internal influencing components, there are some external influencing components, the occurrence of a shock in them can lead to an increase in uncertainty in the production of said sectors. Exchange rate and oil price are among these things for all countries. ...
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In different production sectors, in addition to the internal influencing components, there are some external influencing components, the occurrence of a shock in them can lead to an increase in uncertainty in the production of said sectors. Exchange rate and oil price are among these things for all countries. And the effect of the price of oil for the exporting and importing countries of this type of energy is not the same and will be different. There are not many studies on the effect of these factors on the production of different economic sectors of oil exporting countries, and the direction of the effect of this component is not clear for these countries. Therefore, the present study was conducted with the aim of analyzing the impact of oil shocks and exchange rate fluctuations on the economic growth of industry, agriculture and services in Iran using the ARDL model for the seasonal period from 2010 to 2021. The present study is applied in terms of purpose and library and documentary research method. The website of Iran Statistics Center and Central Bank was used to collect information. The results of this research show that for the agricultural sector, the effect of exchange rate fluctuations in the short term is positive and significant, but the effect of oil shock is not significant. In the industry and mining sector, oil price shock has a significant and positive effect among the studied variables. Meanwhile, the effect of exchange rate fluctuations on the production of this sector is not significant. For the service sector, the effect of exchange rate fluctuations and oil shock is not significant and interpretable. For the industry and mining sector, among the examined variables, in the long term, only the growth of oil prices at the level of 10% is significant and positive. The effect of the increase in the price of oil is also positive on the production value of the industry and mining sector and can lead to an increase of 0.16% in this variable.Community Verified icon
Financial monetary economy
Bahare Bazargan; ali cheshomi; mahdi khodaparast
Abstract
The interest rate is an important indicator for the economy that is affected by economic factors. Macroeconomic factors that reflect the state of the economy are important for the behavior of interest rates. In addition, major global shocks such as COVID-19 can also affect interest rates. Therefore, ...
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The interest rate is an important indicator for the economy that is affected by economic factors. Macroeconomic factors that reflect the state of the economy are important for the behavior of interest rates. In addition, major global shocks such as COVID-19 can also affect interest rates. Therefore, the aim of this study is to investigate the short-term and long-term effects of economic factors on the interbank interest rate in Iran with monthly data from March 2018 to March 2024 with the ARDL approach since the beginning of the epidemic and the period after that. Experimental findings showed that the exchange rate and oil price have a positive and significant effect on the interest rate in the long term during the corona and post-corona outbreak. The results show a negative and significant relationship between the consumer price index and the interest rate in the long term. In addition, the results indicate that there was no statistically significant relationship between GDP and liquidity with interest rates in the post-Corona era. The policy implications of this study provide important findings about the factors influencing interest rates in crisis situations.
Financial monetary economy
Zeinab Shabani Koshalshahi; Mohammad Taher Ahmadi Shadmehri; Ali Akbar Naji Meidani; Mohammad Ali Falahi
Abstract
This paper tried to study the effect of credit crunch on the stagnation of industrial sector and their bilateral relationship. In addition, the role of good governance on the intensity of the relationship between these two will be examined. For this purpose, the MS-IVAR model is used. The credit crunch ...
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This paper tried to study the effect of credit crunch on the stagnation of industrial sector and their bilateral relationship. In addition, the role of good governance on the intensity of the relationship between these two will be examined. For this purpose, the MS-IVAR model is used. The credit crunch index is calculated based on the maximum available information and its main determinants. Data were collected with annual frequency (1996- 2020) from the most recent statistics published by the Central Bank of the Islamic Republic of Iran and World Bank website. The results showed that credit crunch had a positive significant effect on the stagnation of industrial sector. In addition, there is an intensified relationship between these variables. However, good governance index influence can significantly reduce the severity of effect of credit crunch, as demonstrated through interactive analysis. Therefore, promoting good governance can be mentioned as a solution to compensate for the negative effect of credit crunch on the stagnation of industrial sector
Financial monetary economy
Mohsen Valizadeh; hossein asgharpour; behzad salmani
Abstract
The main objective of this study is to investigate the effect of the monetary policy transmission mechanism (money volume, monetary base, and liquidity) on GDP through the exchange rate channel in the Iranian economy. In this regard, seasonal data for the period 1375-1399 and the Bayesian autocorrelation ...
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The main objective of this study is to investigate the effect of the monetary policy transmission mechanism (money volume, monetary base, and liquidity) on GDP through the exchange rate channel in the Iranian economy. In this regard, seasonal data for the period 1375-1399 and the Bayesian autocorrelation model technique have been used. The results of instantaneous shocks from the Bayesian autocorrelation model of production show that the exchange rate plays an important role in the impact of monetary policy on GDP. According to the results obtained, if the percentage of exchange rate changes is equal to the percentage of monetary base changes, the monetary base leads to an increase in production. In other words, the monetary base through the exchange rate channel leads to a positive impact on GDP. This finding is also true for the M1 money volume. The difference between the monetary base transmission mechanism and the money volume through the exchange rate channel is that the impact of the money volume on production is greater than the impact of the money base on production through the exchange rate channel. The results of this study for liquidity show that if the percentage of exchange rate changes is equal to the percentage of liquidity changes, it will have a negative impact on production. In other words, liquidity through the exchange rate channel has a negative effect on Iran's GDP. In general, the results confirm that the monetary policy transmission mechanism through the exchange rate channel is inverted U-shaped and has a positive effect to some extent, and after passing that threshold, it leads to the destruction of GDP.
Financial monetary economy
sabah faisal; taghi ebrahimi salari
Abstract
Today, due to climate changes caused by the emission of greenhouse gases, renewable energies play an important role in achieving sustainable development. In addition, it is inevitable for countries to join the global village and develop the financial sector. Therefore, the purpose of this study is to ...
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Today, due to climate changes caused by the emission of greenhouse gases, renewable energies play an important role in achieving sustainable development. In addition, it is inevitable for countries to join the global village and develop the financial sector. Therefore, the purpose of this study is to investigate the role of financial development and globalization on the consumption of renewable energy in the developing societies of Asia with the new moment quantile regression (MMQREG) approach during the period of 1990-2022. The results showed that energy consumption, globalization and financial development contribute to the development of clean energy in developing countries. The results show that economic growth reduces the development of green energy in developing countries. In addition, the results did not show a significant relationship between carbon emissions and green energy development in developing countries. Therefore, in order to achieve the goals of sustainable development through the development of clean energy, the authorities of the mentioned countries should pay special attention to the role of financial development and globalization.
Financial monetary economy
Ali Akbar Naji Meidani; faeze afzali; Hadi Esmaeilpour Moghadam
Abstract
One of the most fundamental sectors in economic and social development planning is housing. One of the most important challenges facing the housing market is the existence of speculation in this market, which leads to a market bubble and, as a result, imposes high costs on society. The main objective ...
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One of the most fundamental sectors in economic and social development planning is housing. One of the most important challenges facing the housing market is the existence of speculation in this market, which leads to a market bubble and, as a result, imposes high costs on society. The main objective of this research is to investigate the housing rental bubble and its influencing factors in Iran during the period 1990-2024. Therefore, first, using the Kalman filter, the rent bubble is calculated, and then the factors affecting it are analyzed using the ARDL approach. Findings from the estimation of the housing rent bubble showed that a significant portion of the housing rent changes in this period were not only due to changes in fundamental variables but also due to the formation of a price bubble, so that since 2019, due to increasing inflation, decreasing people's purchasing power, and increasing rents, the amount of the housing rent bubble has increased. The results of the ARDL approach also showed that in the long run, real liquidity and the unofficial exchange rate have a positive and significant relationship with the housing rental bubble. In addition, the results indicate that GDP per capita, unemployment rate, and bank interest rate have a negative relationship with housing rent bubbles in the long run. This study emphasizes the government's influence on the housing market through monetary policy with liquidity and interest rate instruments. Therefore, authorities should pay attention to the effects of monetary policy on the housing market.
Financial monetary economy
Seyed Afshin Mosavi; Sara Ghobadi; Bahar Hafezi; Yazdan Gudarzi Farahani
Abstract
This paper examines the effects of exchange rate policies and liquidity creation on key macroeconomic variables in Iran. Using quarterly data from 1991 to 2023, we employ a Dynamic Stochastic General Equilibrium (DSGE) model to analyze the transmission mechanisms of these shocks. The Iranian economy ...
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This paper examines the effects of exchange rate policies and liquidity creation on key macroeconomic variables in Iran. Using quarterly data from 1991 to 2023, we employ a Dynamic Stochastic General Equilibrium (DSGE) model to analyze the transmission mechanisms of these shocks. The Iranian economy has long grappled with the interdependence of exchange rate and monetary policies, presenting significant challenges for policymakers. A substantial portion of government budget expenditures is financed through oil export revenues and withdrawals from the Foreign Exchange Reserve Account. This dynamic compels the Central Bank to purchase foreign currency, consequently expanding the monetary base. Given this linkage, monetary authorities must carefully assess the impact of oil revenue fluctuations when formulating policies to ensure economic stability. Our study specifically investigates: The exchange rate policy channel (transmitted through exchange rate adjustments). The monetary policy channel (transmitted through liquidity creation). Key findings reveal that: Exchange rate shocks have a more pronounced inflationary effect compared to liquidity creation shocks. These shocks also lead to reductions in both consumption and income, underscoring their contractionary impact on the economy. These results highlight the critical role of exchange rate management in Iran’s macroeconomic stability and suggest that policymakers should prioritize mitigating exchange rate volatility to curb inflation and support economic growth.
Financial monetary economy
Mostafa Hassan Jassim Al-Jalabi; maryam emamimibodi
Abstract
1- INTRODUCTIONWith the passage of time and the importance of international interactions between countries in the field of economy, topics such as currency market, foreign trade, capital flow in the international arena, etc. became very important in economic theoretical foundations. One of the issues ...
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1- INTRODUCTIONWith the passage of time and the importance of international interactions between countries in the field of economy, topics such as currency market, foreign trade, capital flow in the international arena, etc. became very important in economic theoretical foundations. One of the issues that is emphasized a lot in the field of international economy is the management of the foreign exchange market and, as a result, issues such as the mechanism of determining the equilibrium exchange rate and exchange rate deviation, which almost all countries are involved in with varying intensity and weakness. . Undoubtedly, the stability of the currency market and the establishment of a real equilibrium exchange rate in this market are of double importance in developing countries. Therefore, managing the exchange rate and preventing its fluctuation and deviation from an equilibrium value has become one of the most important concerns of policymakers in these developing countries, including Iraq. Because, any cross-sectional fluctuation or exchange rate deviation in the short and long term can create challenges for other sectors of the economy, as well as acute imbalances at the macro level and the balance of payments crisis in developing countries are often the direct result of deviation from the long-term equilibrium path is the exchange rate.2- THEORETICAL FRAMEWORKThe exchange rate is one of the important tools in the hands of monetary authorities in all countries of the world in general and developing countries in particular, due to its high sensitivity to the investment environment, business environment and economic conditions. The most appropriate exchange of facts and data is political economy. The excessive sensitivity of macroeconomic variables to the change of the Iraqi exchange rate is due to the deterioration of the real macroeconomic environment.On the other hand, foreign trade plays an important role in determining the fate of any country, and this important economic sector connects the domestic economy of the country with the international economy. Trade is so important that some see it as a driver of development. Different economic schools offer different views on business. Some people like the liberals consider it a factor of peace, realists consider it a factor of increasing national power if the trade balance is positive, and some others like; Marxists propose free trade as a tactic of developed countries to dominate developing countries. The exchange rate is directly related to foreign trade and any increase or decrease can affect the trade balance and competitiveness of domestic producers against foreign goods inside and outside. There are positive relationships between the exchange rate and domestic production, therefore, an increase in the exchange rate can be useful for national production, but it should be noted that the increase in the exchange rate should not be sudden and fluctuating, because Fluctuations in the exchange rate create uncertain conditions for the country's producers and exporters, which can have a negative impact on industrial and agricultural production, employment, etc. The political will of the government should be independent of any political dealings with the exchange rate, so that in this way it can prevent the fluctuations of the exchange rate and its adverse effect on exports and consequently on the power of the country. In fact, policy-making in this area should be technically appropriate to the conditions of domestic and foreign inflation and away from any considerations such as institutional, party interests, election time, and budget deficit.3- METHODOLOGYTo investigate the effect of deviations of the equilibrium exchange rate on the foreign trade relationship of Iraq for the years 2005 to 2021. Therefore, in the first step, the influencing factors on the equilibrium exchange rate were examined using the DOLS method, and the second step was to examine the short-term and long-term effects of deviations of the equilibrium exchange rate on the exchange, export, and import relationship using the ARDL method.4- RESULTS AND DISCUSSIONIn this paper we examine three hypotheses. According to the negative and significant short-term and long-term deviation of the exchange rate with the exchange relationship, it shows exports and imports. Therefore, in the first hypothesis; the effect of exchange rate deviation on the exchange relationship of Iraq is negative, it was confirmed and the results showed that the effect of exchange rate deviation on the exchange relationship of Iraq is negative and significant. In the second hypothesis; the negative and significant effect of exchange rate deviation on Iraq's exports has been tested and this hypothesis has been confirmed. But, the third hypothesis; the exchange rate deviation had a negative and significant effect on Iraq's imports, and this hypothesis was also confirmed.5- CONCLUSION AND SUGGESTIONConsidering the negative and significant effect of exchange rate deviations on exports, imports and the exchange relationship, it is suggested that the currency policies in Iraq be designed in such a way that the real exchange rate moves towards the equilibrium level and from high deviations the exchange rate should be reduced as much as possible. In this regard, the reduction of the nominal value of money is introduced as a solution to eliminate the deviation of the real effective exchange rate from the long-term equilibrium path, which the use of this policy is based on the complementary policy that increases the prices in the country. Can be used as a practical solution and economic policy makers in Iraq use the equal purchasing power method due to the simplicity and availability of information from price indices, inflation rate and consumer price index to estimate Use the exchange rate. Finally, since the exchange rate is influenced by political relations, the imposition of economic sanctions, the price of oil and the occurrence of war, it is strongly affected. Improving political and economic relations with neighboring countries and major economic powers can be effective in this regard.
Financial monetary economy
zahra heirani; kiomars sohaili; SHAHRAM Fattahi
Abstract
In this study, we seek to test the financial tension and uncertainty of Iran's monetary policy despite the role of government governance in recession and boom regimes. For this purpose, by using the principal component analysis (PCA) model in the first part, the financial stress index was calculated ...
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In this study, we seek to test the financial tension and uncertainty of Iran's monetary policy despite the role of government governance in recession and boom regimes. For this purpose, by using the principal component analysis (PCA) model in the first part, the financial stress index was calculated and in the second part by using the rotation model and the Markov switching (MS) regime change, the effect of the study variables during the period of 1996 to 2022 on an annual basis was investigated. Based on the obtained weights, the monetary and financial sector has the greatest effect in creating financial tension. After that, the foreign exchange sector and the stock market have the next effects. Among the variables, the free exchange rate has the most impact on financial stress in Iran's economy, followed by oil income to GDP, money to liquidity ratio, government expenditure to GDP ratio, and the real interest rate has the greatest impact on financial stress. in Iran's economy, also based on the results of Markov model estimation, for one percent increase in financial stress and oil price, respectively; 36 and 27 units, monetary policy uncertainty increases. Also, the quality of governance and the volume of business during the boom lead to a decrease of 8 and 12 units of monetary policy uncertainty.
Financial monetary economy
Fariba Heydari; Kamran Nadri; Gholamali Haji
Abstract
Changes in housing prices can cause booms and Recession in the housing sector, the consequences of which affect the economy. Considering the importance of this issue, identifying the factors affecting housing prices can help policy makers and planners in formulating relevant policies. Focusing on this ...
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Changes in housing prices can cause booms and Recession in the housing sector, the consequences of which affect the economy. Considering the importance of this issue, identifying the factors affecting housing prices can help policy makers and planners in formulating relevant policies. Focusing on this goal, this research has examined a significant number of variables that are likely to affect the fluctuations of housing prices in the country..In this research, 24 variables affecting housing prices were included in the model, and finally, using the dynamic averaging model approach, the most important variables affecting housing prices were determined.Based on the results of dynamic averaging, the most important variables affecting housing prices in Iran's economy are inflation variables, exchange rate, liquidity, economic growth, banks' payment facilities for housing, outstanding claims and increase in bank debt, the amount of fixed assets of banks, land price index in Tehran, sanctions index, population, housing tax, urbanization coefficient and construction materials price index. Based on the results of the model, the variables of inflation, exchange rate, liquidity, banks' payment facilities for housing, the amount of fixed assets of banks, land price index in Tehran, sanctions index, population, urbanization coefficient and the price index of construction materials have a positive effect and economic growth variables, claims Delayed and increased bank debt and housing tax have a negative effect on housing prices.Based on the results of inflation, they have the highest percentage of variance decomposition and changes on the housing price variable; Also, based on the results of the TVP-VAR model, it was observed that the shock effect of selected effective variables on housing prices has increased in the last decade.
Financial monetary economy
Abdorasoul Sadeghi; Farkhondeh Jabalameli; Aliasghar Heidari Zefreh
Abstract
1- IntroductionGiven the continuous budget deficit of government mainly coming from the lack of alternative financial resources for oil revenues, unstoppable upward trend of consumer price index, two-digit rates of unemployment, and as well as a non-independent Central Bank., money, Central Bank, and ...
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1- IntroductionGiven the continuous budget deficit of government mainly coming from the lack of alternative financial resources for oil revenues, unstoppable upward trend of consumer price index, two-digit rates of unemployment, and as well as a non-independent Central Bank., money, Central Bank, and its monetary policies have always been a challenging issue in the Iranian economy. Hence, this study assesses the cause of preferring discretionary monetary policy to rule-based monetary policy in Iran’s inflationary environment of economy. In addition, we are supposed to find out whether or not the insistence on discretionary monetary policies can realize Iran’s government’s interests. Ultimately, according to the results, policy implications are presented to adopt monetary policies so that the government, Central Bank, and the private sector reach better outcomes. 2- Theoretical Framework The question is whether policymakers can make a credible commitment to the private sector concerning the future monetary policy, so that they can set their price expectations based on monetary authority’s commitment? In response to this question, two types of discretionary and rule-based monetary policies have been formed. Discretionary monetary policy was first discussed by Simons due to considerable uncertainty arising from the 1930s deep economic recession (Glasner, 2017). In addition, the duality of discretionary monetary policy versus rule-based monetary policy was brought into discussion after the 1970s inflationary conditions (Dellas and Tavlas, 2022). In this regard, Simons considers predictability of monetary policy as a necessity for achieving stability and reducing uncertainty in an economy. Friedman also recommends rule-based policies to reduce uncertainty (Tryoshin, 2023).More prominently, this duality has always been a subject of debate after the studies of Kydland and Prescott (1977) as well as Barro and Gordon (1983), which was brought into discussion the time inconsistency issue of discretionary monetary policy. The rule-based or discretionary monetary policies can influence the private sector's price expectations, which affect the central bank's objectives of maintaining price stability and surging economic growth. Therefore, as pointed out by Jia (2023), it finds much important for the private sector to suitably predict monetary policy objectives to set their price expectations. Hence, the Central Bank's rule-based or discretionary policies can impact the adjustment of the private sector’s price expectations in line with the declared policies. Some believe that the Central Bank cannot bind itself to a fixed monetary rule over an extended period of time. This is why new conditions may arise in the future, requiring the adoption of a new monetary policy to address those conditions. Hence, committing monetary authority to a fixed rule does not align with the realities (Snowdon and Howard, 2013), i.e., monetary policies are adjusted according to the economic conditions of that period of time (Laureys and Meeks, 2018; De Paoli and Paustian, 2017).3-Methodology According to the theoretical foundations, and Kydland and Prescott (1977) as well as Barro and Gordon (1983), under the framework of microeconomics bases, Nash equilibrium, and mixed strategic games, and as well as taking into account the two players of Central Bank and private sector, the cause of preferring discretionary monetary policy to rule-based monetary policy is examined. In this concern, given some realities related to the Iranian economy, we consider some assumptions. First, there is considerable amount of uncertainty. Therefore, both players, the private sector and Central Bank, have no enough confidence in the strategies chosen by the opponent. Second, the private sector places more importance on purchasing power of wages. Considering the passivity of real wages of labors and following their purchasing power to the inflation volatility, originating from the rigidity of nominal wages on labor contracts, more weight is given to the inflation rate compared to the unemployment rate by the private sector.4- Results and Discussion The results show that the Central Bank dependence and its being passive against the fiscal policies of government, an untrusting atmosphere between the Central Bank and privet sector, stagnation situation and a low economic growth, nominal wages rigidity on job contracts, nominal interest rates repression, and continuous budget deficit have made the Central Bank and government intended to improve the employment and budget deficit situations by an unpredicted inflation resulting from discretionary monetary policy. The earnings indicate that the private sector is in knowledge of this reality, and thus the Central Bank is no more able to take advantage of discretionary policies to deceive the private sector for achieving the objectives pointed out above. More explicitly, an equilibrium is formed in which both players distrust each other, and they take this distrust into their making decisions. 5- conclusion and policy implicationsNot only the government, but also the private sector will not reach maximum earnings, and they both meet minimum earnings if the Central Bank keeps insisting on discretionary policies. Whereas they can both reach medium earnings, which is an optimal case, if the rule-based policies are followed. In this regard, the repression of nominal interest rates as well as the rigidity of nominal wages on job contracts have significantly motivated the Iranian government and Central bank to follow discretionary monetary policies. Because, all the government’s short-term benefits, resulting from discretionary policies, come from an unforeseen inflation that is not fully incorporated by the private sector’s price expectations. Iran’s government is aware of this economic reality, the rigidity of nominal wages on labor contracts, which can promote the employment growth by lowering the cost of real wages paid in the labor market. On the other hand, considering the repression of nominal interest rates that are not proportionally adjusted to the inflation rates, the real interest rates experience more decrease after a rise in inflation. Therefore, the cost of repaying the principal and interest rates of government’s issued bonds decreases, which improves the government's budget deficit. Thus, to change monetary policies from discretionary to rule-based policy, it is necessary to be moderated the factors motivating the government and Central Bank to pursue discretionary policies, including the rigidity of nominal wages on job contracts and the repression of nominal interest rates.
Financial monetary economy
mahdieh rezagholizadeh; Morteza Abdolhosseini; Hossein Jafari
Abstract
Considering that the macro-decisions of the central bank of any country can affect the capital market of country, in this study, the effect of central bank independence on the performance of the stock exchange in a selection of countries is investigated. These countries divided into two groups of developed ...
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Considering that the macro-decisions of the central bank of any country can affect the capital market of country, in this study, the effect of central bank independence on the performance of the stock exchange in a selection of countries is investigated. These countries divided into two groups of developed and developing countries based on the FTSE Russell classification about their stock market value. The estimation of the research model is done using the method of generalized method of moments (GMM) and during the period of 2000-2017. The results of the model estimation show that the independence of the central bank has had a positive effect on the performance of the stock exchange in both groups of developed and developing countries.Considering that the macro-decisions of the central bank of any country can affect the capital market of country, in this study, the effect of central bank independence on the performance of the stock exchange in a selection of countries is investigated. These countries divided into two groups of developed and developing countries based on the FTSE Russell classification about their stock market value. The estimation of the research model is done using the method of generalized method of moments (GMM) and during the period of 2000-2017. The results of the model estimation show that the independence of the central bank has had a positive effect on the performance of the stock exchange in both groups of developed and developing countries.
Financial monetary economy
Lale Mushtakhi; narges samadpoor
Abstract
INTRODUCTIONThe role of the financial system on economic development has attracted and received increased attention from both academia and policy makers, with resulting divergent views emerging. Over the past decades, focus on this area has increased, with mixed findings which remains a theoretical and ...
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INTRODUCTIONThe role of the financial system on economic development has attracted and received increased attention from both academia and policy makers, with resulting divergent views emerging. Over the past decades, focus on this area has increased, with mixed findings which remains a theoretical and empirical controversy. Financial development has played a leading role in many developing economies (Puatwoe and Piabuo , 2017). There is a widespread believe among policy makers that financial development enhances productivity which promotes growth. There are a few key findings from the analysis of how financial development affects economic growth. The first is through the savings rate that leads to investment and capital accumulation, and the second is through channel allocation, in which financial development can increase efficient investment allocations thereby increasing productivity .(Ikhsan1 and Satrianto,2023)But the situation in developing countries is different. Some studies argue that the financial sector stimulates economic growth, while others argue the opposite (Sulemana and Dramani, 2020). The study (Adusei, 2013) also shows evidence that financial development undermines economic growth and is an anti-growth factor. There are also few studies that state that financial development has no effect on economic growth. These studies provide evidence in support of this. They provide the concept that financial development and economic growth are not related and are two separate phenomena that are independent from each other (Yıldırım, S., Özdemir, BK., and Doğan, B., 2013).All these different views are sufficient reasons to examine The effect of financial development indicators on economic growth in IranThe purpose of this research is to investigate the long-term and short-term effects of financial development indicators (financial efficiency and financial depth) on economic growth in Iran.2- THEORETICAL FRAMEWORKSome previous studies (Bittencourt, 2012; Estrada, Park, & Ramayandi, 2010; Hassan, Sanchez, & Yu, 2011; Škare, Sinković, & Porada-Rochoń, 2019) have indicated that financial development can affect economic growth by performing the function of financial intermediaries so that the distribution of financial resources can be absorbed by the productive sector. Other studies (Moyo & Le Roux, 2020; Petkovski & Kjosevski, 2014) provide evidence that financial development has a negative influence and has not been able to play a role in economic growth. IkhsanSome studies show that developing countries mostly report the negative impact of financial development on economic growth, which can be caused by specific characteristics, principled framework and management issues.Some studies (Bloch and Tang 2003., Ram and Andersen 1999., & Tang and Trap 2003.( also provide evidence in support of the concept that financial development and economic growth are not related and are two separate phenomena that are independent of each other (Bloch and Tang 2003, Ram and Andersen 1999, & Trap).Therefore, the results that have been provided over time about this relationship have been inconclusive and only three main results have been obtained from these studies: positive, negative and lack of influence.According to the results of the study (Bakar and Sulong, 2018), the impact of financial development on economic growth depends on the choice of time frame, the sample of countries, the list of variables, the choice of different indicators and even econometric methods. 3- METHODOLOGYIn order to investigate the long-term and short-term effects of capital efficiency and financial depth on economic growth, this research utilises the newly proposed autoregressive distributive lag (ARDL) approach which was developed and introduced by Pesaran and Shin (1995 and 1998), Pesaran et al.The analysis using the ARDL method is based on the interpretation of three equations: dynamic equation, long-term equation and error correction. Before estimating the model, default tests of unit root, homogeneity and determination of optimal interval should be performed4- RESULTS & DISCUSSIONUsing the ARDL technique, it was found that there is a positive short-term relationship between liquidity volume and economic growth and a similar negative short-term relationship between banking system deposits and economic growth. But in the long run, the banking system's deposits have a positive and significant effect on economic growth. While the effect of liquidity on economic growth in the long run is negative. Also, private sector credit as an indicator of financial efficiency, both in the long run and in the short run, has no significant effect on economic growth5- CONCLUSIONS & SUGGESTIONSThe impact of financial development on economic growth is one of the most important channels in economic matters, which has attracted many debates and controversies, but the results of research related to the impact of financial development indicators on economic growth are theoretically and empirically different from each other.All these different views are sufficient reasons to examine the effect of financial development indicators (financial efficiency and financial depth) on economic growth in Iran.Therefore, in this study, the long-term and short-term effects of financial efficiency indicators and financial depth on economic growth in Iran's economy during the period from 1983 to 2021 were investigated in a time series.According to the results obtained from the research, it can be stated that: The volume of liquidity can lead to economic growth if it can provide a suitable basis for the optimal allocation of resources and increase capital efficiency.Savings can be important as one of the sources of economic growth in the long term, but it cannot be considered as the cause of economic growth in Iran in the short term.Simply granting facilities to the private sector cannot guarantee financial efficiency, but the way these resources are used and spent is in the direction of economic growth and development, which will show financial development.
Financial monetary economy
Yaser Moomivand; seyyd mohammadbagher najafi; Kaveh Derakhshani Darabi; jamal fathollahi
Abstract
Monetary policies are one of the most important policy tools for improving economicvariables, including inflation and production. Monetary policy is currently a dynamic andchallenging field of economic sciences, theoretically and empirically. The views on the effectof monetary policy on production vary ...
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Monetary policies are one of the most important policy tools for improving economicvariables, including inflation and production. Monetary policy is currently a dynamic andchallenging field of economic sciences, theoretically and empirically. The views on the effectof monetary policy on production vary from the ineffectiveness and neutrality of money inthe short and long term to the effectiveness of monetary policy and its effect on production inthe long term and even in the short term.2. Review of the literatureInstitutional aspects and their effect on economic variables and the economic performance ofdifferent societies have been attracted by experts in the field since the 1980s and led to thedevelopment and expansion of its literature in the 1990s. Moreover, the valuable works ofNorth and Coase, as well as, winning the Nobel Prize in Economic Sciences for their effortsto introduce institutional analyses put forward institutionalism as one of the leading economictheories. According to this literature, it can be stated that the same impulses and policies canbe followed by different reactions due to temporal and spatial differences in the institutionalenvironment in which they happened (Dehghan Monshadi, 2019).2.1. The effect of governance on the effectiveness of policiesThe new economic literature emphasizes the importance of institutions and governanceconditions in the economic development process and the performance of economic policies.Governance has a long history and has been defined in different ways. It literally meansdomination, ruling, and strategic government, but it means the activity of countrymanagement and control of a company or organization in the Oxford English Dictionary(Gholipoor, 2004).3. Materials and methodsThis research investigated the effect of variables on the effectiveness of monetary policyusing the model introduced by De Mendonça and Nascimento (2018), which is presented asRelation (1).(1)where is the index obtained for the effectiveness of the monetary policy in the i th country inthe t th year, GGI is the index of good governance, and X is other economic variables affectingthe effectiveness of the monetary policy, such as the degree of openness of the economy, thedevelopment of financial markets, and virtual variable of the existence of the inflationtargeting policy in the relevant country. In the years with the inflation targeting policy, thevalue was set to 1, but it was 0 in other years. In addition, the GDP variable was included inthe model to include other variables affecting the effectiveness of monetary policy.4. ResultsThe effectiveness index of monetary policy was calculated for the sample countries beforeestimating the coefficients using the proposed approach. This research calculated theeffectiveness of monetary policy using the approach introduced by Krause and Rioja (2006).In this approach, and were calculated for the selected countries in each year. The inflationdeviation was measured by the deviation of the consumer price index. Analysis of thedescriptive statistics for the research variables demonstrated that this index average for thecountries in the period under study was 2980.43 and the median equaled 1.48. It should benoted that the lower the value of the index, the more effective the policy would be in thereduction of inflation and production fluctuations. The highest and lowest index value was873575.4 and -107.91, respectively. Jarque- Bera statistic and its significance level alsoshowed that the distribution of the variable is not normal.5. ConclusionAs shown by the results of earlier studies and the present research, the process of selection,decision-making, and performance of individuals and societies takes place within theframework of institutions. Thus, their reaction to various phenomena, including economicand monetary policies, depends on institutions. One of the major institutions is thegovernance that affects economic variables with monetary and financial policies. Therefore,the primary objective of this research was to determine the effect of governance quality onthe effectiveness of monetary policy. According to the results, improving the quality ofgovernance significantly reduced production and inflation fluctuations and enhanced theeffectiveness of monetary policy. Hence, it could be concluded that in societies withfavorable governance indicators, better and more complete implementation of laws andregulations could be expected, and formal and informal obstacles to implement economicpolicies are reduced. The results obtained from the estimation of coefficients indicated asignificant relationship between the inflation targeting policy and the increased effectivenessof monetary policy. The existence of inflation-targeting policy and its obligation make thecentral bank focus more on the main goals of monetary policy, which is to maintain the valueof the national currency and increase economic stability. Under such circumstances, thepolicy-maker can have more authority in controlling inflation and production fluctuationsrather than other secondary goals, resulting in more success in controlling inflation andproduction fluctuations.
Financial monetary economy
Eisa Abbasi; Taymoor Mohamadi; Seyed Shamsedin Hosseini
Abstract
1- INTRODUCTION
Considering that cryptocurrencies exhibit commodity characteristics such as demand shocks, high price fluctuations, etc., cryptocurrencies can be compared with the behavior of the gold and oil markets (except when there is uncertainty about the supply conditions of gold and oil. ...
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1- INTRODUCTION
Considering that cryptocurrencies exhibit commodity characteristics such as demand shocks, high price fluctuations, etc., cryptocurrencies can be compared with the behavior of the gold and oil markets (except when there is uncertainty about the supply conditions of gold and oil. There is no such uncertainty in the cryptocurrency market). Therefore, due to the commodity nature of Bitcoin, the price of oil and gold can affect the price fluctuations of cryptocurrencies. It seems that cryptocurrencies can play the role of a safe haven for commodity market investors, so the cryptocurrency market can cover the fluctuations in gold and oil prices. Commodity markets, which this study focuses on gold, oil and cryptocurrencies, have a series of characteristics. It seems that the gold market has surpassed the cryptocurrency and oil market in absorbing information, while the cryptocurrency market has higher price fluctuations than the gold and oil markets. Empirical evidence shows that Bitcoin can have a close relationship with the commodity market.Therefore, due to the commodity nature of Bitcoin, the price of oil and gold can affect the price fluctuations of cryptocurrencies.بنابراین، به دلیل ماهیت کالایی بیت کوین، قیمت نفت و طلا می تواند بر نوسانات قیمت ارزهای رمزپایه تأثیر بگذارد.
Therefore, due to the commodity nature of bitcoin, the price of oil and gold can affect the fluctuations of the price of crypto-currencies.
بنابراین، به دلیل ماهیت کالایی بیت کوین، قیمت نفت و طلا می تواند بر نوسانات قیمت ارزهای دیجیتال تأثیر بگذارد.
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2- THEORETICAL FRAMEWORK
Every person in the financial markets who has an asset portfolio tries to increase or maintain the value of his asset portfolio. The position of each asset in the portfolio has two characteristics: return (price change) and risk (price volatility). The behavior of asset portfolio owners is such that they try to increase returns and reduce risk. In this framework, they buy or sell assets in their portfolio in order not only to prevent the value of their asset portfolio from decreasing, but also to increase the value of their wealth. This behavior of the capital owners leads to the creation of connections between the global markets, including oil, gold, and cryptocurrencies, so that their yield fluctuations are connected to each other through the risk spillover effect. The asset allocation models have been investigated in a practical way for about half a century. The most well-known asset allocation model is the mean-variance strategy (modern portfolio theory), which was first developed by Markowitz (1952) to describe the process of optimal capital allocation, assuming a fixed investment opportunity set, between different asset groups over a period.
3- METHODOLOGY
In this study, the 𝑉𝐴𝑅− 𝑀𝐺𝐴𝑅𝐶𝐻 − 𝐺𝐽𝑅 – 𝐵𝐸𝐾𝐾 model has been used in order to investigate the asymmetric effects of turbulence spillover between the oil, gold and bitcoin markets because of the following advantages. First, this model has high flexibility. Second, in this model, unlike constant conditional correlation (CCC) models, the conditional correlation changes over time. In addition, it is possible to check several markets at the same time. The existence of the covariance equation makes it possible to examine the simultaneous relationship between two markets. In the BEKK model, the fluctuations of a market are affected by the fluctuations and shocks of other markets, the shocks of that market and the covariance of the markets. In other words, the effects of the markets on each other, which is reflected in the delayed covariance, have an effect on the fluctuations of the markets. These effects can be symmetrical or asymmetrical. Also, this model makes it possible to have a dynamic dependence between the fluctuations of the variables. The only disadvantage of this model is that it is not suitable for examining more than three or four markets due to the increase in parameters.
4- RESULTS & DISCUSSION
The results indicate that the contribution of the memory of turbulence in explaining the current turbulence is greater than the impact of past shocks. The impact of past impulses and the memory of the turbulences of cryptocurrencies is high on the turbulences of this market. In other words, it can be said that fluctuations in the cryptocurrency market are significantly explained by the past impulses of this market. The results show that there is one-way turbulence spillover from the Bitcoin market to the gold market and the oil market, but the opposite is not true. The results of the study also indicate leverage effects in the markets. The leverage effects of the gold market shock along with the oil and bitcoin market shocks on the gold market are significant. The leverage effects of the oil market shock along with the gold and bitcoin market shocks are also significant on the oil market and the leverage effects are also significant for the bitcoin market.
The results of the study indicate leverage effects in the markets, in other words, positive and negative shocks have different effects on price fluctuations, and bad news has a greater effect than good news on price fluctuations.
نتایج تحقیق حاکی از تأثیرات اهرمی در بازارها است، به عبارت دیگر شوک های مثبت و منفی تأثیر متفاوتی بر نوسانات قیمتی دارند و اخبار بد تأثیر بیشتری نسبت به اخبار خوب بر نوسانات قیمت دارند.
The results of the study indicate leverage effects in the markets, in other words, positive and negative shocks have different effects on price fluctuations and bad news has a greater effect on price fluctuations than good news.
نتایج تحقیق حاکی از تأثیرات اهرمی در بازارها است، به عبارت دیگر شوک های مثبت و منفی تأثیر متفاوتی بر نوسانات قیمتی دارند و اخبار بد تأثیر بیشتری بر نوسانات قیمتی نسبت به اخبار خوب دارند.
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Financial monetary economy
milad asadpour; ALIREZA Rezaee
Abstract
The economy and the forecasting of its indicators is one of the main and influential elements in the life of every person and can be the basis for the superiority of individuals and governments over others, as a result, the forecasting of indicators is always one of the main challenges and concerns of ...
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The economy and the forecasting of its indicators is one of the main and influential elements in the life of every person and can be the basis for the superiority of individuals and governments over others, as a result, the forecasting of indicators is always one of the main challenges and concerns of economists and investors. On the other hand, with the emergence of cryptocurrencies and the increase in their price value, a lot of investment has been made in this field, so finding methods to predict the price of cryptocurrencies in the future is very important. In this article, a method for predicting the price of Bitcoin using artificial intelligence algorithms is presented. For this purpose, the characteristics affecting the future price of bitcoin were identified and categorized and standardized in two separate data sets including price data and structural data of the bitcoin network, then a new structure consisting of three feedforward and feedback neural networks was designed, the first and second network including the GRU layer. which predict prices in parallel and separately from each other. Next, the output of each of these networks is combined with each other by a neural network, and finally, values are obtained as price predictions for the coming days. The results of the research and error calculation show that using the last 15 or 20 days is the best interval for predicting the future price of Bitcoin, which has an accuracy of 97.36% and 96.76%, which shows the high accuracy and efficiency of this method. Also, due to the correct selection of the input features, the computational volume of this research has been significantly reduced.
Financial monetary economy
Elham Dehghani; Ali Raeispour Rajabali; Seied Abdolmajed Jalaee Esfandabadi
Abstract
1- INTRODUCTIONWelfare is one of the main men needs which economist and policy makers can tack appropriate planning and policies with true cognition from the effect of government policies on welfare. Generally, it is argued that the goal of monetary policies is making economic stability and remaining ...
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1- INTRODUCTIONWelfare is one of the main men needs which economist and policy makers can tack appropriate planning and policies with true cognition from the effect of government policies on welfare. Generally, it is argued that the goal of monetary policies is making economic stability and remaining the stationary of prices. When money volume increases the level of expectation prices will increase and due to rising expectation inflation and reducing both producers and consumers welfare. Therefore, according to the negative effects of uncertainty conditions in economy on welfare of consumers and producers, assessing the effects of monetary policies on exchange rate in uncertainty conditions and its effect on welfare has undeniable importance for prevent from hazardous economic effects which carried out in this research. For this purpose, the effects of shocks due to monetary policies scenarios through increase in liquidity volume and decrease in required reserve rate (2%, 5% and 10%) on foreign exchange rate (Rial/US$) and total welfare was studied. 2- THEORETICAL FRAMEWORKIn the theoretical literature, two channels have been proposed for the effect of the exchange rate on the economy of a country; one is from a micro perspective (influence on economic agents, i.e. consumers, firms, investors, and the government) and the other is at the macro level. Many researchers have argued that households and firms are negatively affected by exchange rate fluctuations through direct and indirect channels. The direct influence of the exchange rate fluctuation is through the change in the price of imported consumer goods and as a result the change in the consumer price index, and its indirect effect is through the national monetary value and as a result the change in the price of intermediate goods and imported inputs, which leads to increase the cost of production. It is obvious that the uncertainty caused by exchange rate fluctuations has a negative effect on investment decisions, and the unreliability of economic conditions increases the severity of this effect. The direct influence channel is based on the assumption that people don’t desire with the fluctuation of the exchange rate, because it causes fluctuations in their consumption, employment and welfare. Its indirect effect is that firms try to cover future risks caused by exchange rate fluctuations by setting higher prices as a risk premium. Therefore, the price of goods and services increases. It is likely that the demand will be lower and the producers will hire fewer workers and as a result the economic welfare will decrease. This point of view is very common in the literature, and most economists do not consider this conclusion unreasonable that exchange rate fluctuations are costly for economic welfare. 3- METHODOLOGYIn order to meet the research goals the required data was gathered from Social Accounting Matrix (SAM) of Parliament Research Center of Iran in the year 2011 and input-output table of central bank of Iran (CBI) in the year 2016. On the other hand, many researches about the effects of monetary policies on economic variables have been carried out by using static computable general equilibrium and in most advanced case with dynamic computable general equilibrium models. But dynamic computable general equilibrium models divided in two categories: interim and recursive. The interim models are based on optimum growth theorem which assumed that economic agents have the ability of complete prediction while this doesn't correct many economic circumstances, especially in developing countries. Hence many economic experts believe that recursive models are more trustable. Therefore, in this research, in order to achieve the results from gathered data the recursive dynamic computable general equilibrium (RDCGE) model and impulse response functions (IRF) through making shocks on monetary police indexes include of: increase in liquidity volume (2%, 5% and 10%) and decrease in required reserve rate (2%, 5% and 10%) were applied. In addition, for data analyzing the Matlab software were applied. 4- RESULTS & DISCUSSIONResults indicated that shocks of increase in liquidity volume equal to 2%, 5% and 10%, maximally will increase the exchange rate equal to 0.97%, 1.98% and 3.08%, respectively. Also, shocks of decrease in legal reserve rate equal to 2%, 5% and 10%, maximally will increase the exchange rate equal to 0.84%, 0.90% and 1.14%, respectively. Because shocks of increase in liquidity volume and decrease in required reserve rate due to increase in money volume, causes to reduce in value of national money in comparison with foreign exchanges and therefore the Rial value of US$ will increase in domestic. In addition, results showed that shocks of increase in liquidity volume equal to 2%, 5% and 10%, maximally will decrease the total welfare equal to 1.19%, 2.47% and 3.53%, respectively. Also, shocks of decrease in required reserve rate equal to 2%, 5% and 10%, maximally will decrease the total welfare equal to 0.73%, 1.64% and 2.81%, respectively. Because shocks of increase in liquidity volume and decrease in required reserve rate due to increase in money volume, causes to reduce in value and power purchase of national money and consequently increase in inflation rate and decrease in total welfare. 5- CONCLUSIONS & SUGGESTIONSIt is concluded that the studies indexes of monetary policies (increase in liquidity volume and decrease in required reserve rate) will increase the foreign exchange rate (Rial/US$) and decrease the total welfare. Indeed, between studied shocks, shock of increase in liquidity volume has more effect on exchange rate and total welfare in comparison with shock of decrease in required reserve rate. Therefore in condition of uncertainty in exchange rate which economic agents transfer their assets to parallel markets especially foreign exchange market and cause to further increase in foreign exchange rate and consequently increase in inflation rate and decrease in total welfare, it is recommended that central bank take a restrictive monetary policy such as increase in bank interest rate because this policy while increase in investment cost, can almost prevent from speculative activities and transferring assets to exchange rate market and exacerbate the exchange rate fluctuations and finally decrease in total welfare.
Financial monetary economy
Mehdi Kholousi Sadegh; Parviz Davoodi; Mohammadreza Sezavar
Abstract
1- INTRODUCTION
Achieving macroeconomic stability is one of the main issues of policymakers in developed and developing economies, especially in Iran. In order to create stability in the economy, one of the important and efficient tools are the monetary policies that are used in direct and indirect ...
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1- INTRODUCTION
Achieving macroeconomic stability is one of the main issues of policymakers in developed and developing economies, especially in Iran. In order to create stability in the economy, one of the important and efficient tools are the monetary policies that are used in direct and indirect ways by the central bank. Open market operation as an indirect tool of monetary policy is done in most advanced countries that have structured secondary markets related to government bonds through the entry and exit of the central bank in this market. The preparations for the operation of the open market in Iran's economy have been prepared since 2017 and it has been implemented since the beginning of 2019. In the market operations of the Central Bank of the Islamic Republic of Iran, it can buy and sell certain securities, and other banks in Iran can also buy and sell these securities in cooperation with the Central Bank. Considering that the main tool of open market operations is the interest rate, it can be stated that the main objectives of the banking open market operations are the management of the short-term interest rates of the interbank markets in order to balance inflation. Of course, it should be noted that the economic conditions in Iran are different from other countries, because Iran has faced all kinds of economic and non-economic sanctions by Western countries, and it is necessary to consider this influential variable as a quantitative index and measure its effect in the model. Therefore, it is necessary to see the effectiveness of the mentioned operations in the conditions of sanctions. On the other hand, in spite of the extensive exploration regarding the issue of the effectiveness of open market operations, no study with this title has been carried out in a quantitative manner. Therefore, in this paper, the effect of open market operations on variables such as inflation, gross domestic product, exchange rate and interest rate during the period of 1392 to 1400 with seasonal frequency is investigated with the Eviuse software and by using the ARDLmodel.
2- THEORETICAL FRAMEWORK
In the implementation of monetary policy, the central bank can directly use its regulatory power or indirectly influence the conditions of the money market as a high-powered money issuer (bill and currency in circulation and deposits with the central bank). Accordingly, two types of monetary policy tools can be distinguished, which are called direct (not relying on market conditions) and indirect (based on market conditions) monetary policy tools.
3- METHODOLOGY
In order to investigate the effect of open market operations on four key macroeconomic variables, it is necessary to specify four separate equations and estimate each one separately by using the ARDL method. Consideration that the data is seasonal, it is necessary to check the reliability of the variables and the sum of the equations in order to examine the long-term relationship and the convergence of the variables towards the equilibrium value.
4- RESULTS & DISCUSSION
The important results obtained in this research is that the sign of the open market operation coefficient is contrary to economic theories, which indicates the inefficiency of the open market operation under sanctions in Iran, and these results are completely consistent with the official evidence and statistics of the relevant centers.
5- CONCLUSIONS & SUGGESTIONS
In the current situation where Iran's economy is suffering from stagnation and government budget deficit, it seems that open market operation has found the function of financing for the government and has no effect on controlling the interest rate and consequently the inflation rate. In fact, the government issued bonds without consideration and from the very beginning it has disrupted and rendered useless the operation of the open market operation tool as a tool of the new monetary policy procedure in line with inflation targeting. On the other hand, the creation of open market operations and the issuance of bonds will cause global fluctuations or external pressures to be transferred into the country in the form of clear economic effects and create another vulnerable point against sanctions in Iran's economy. In such a way that by imposing severe sanctions and even by playing with the psychological atmosphere, the price of government bonds in the market will change and fall, which can cause the discrediting of government bonds and a blow to the financing of government activities. Therefore, it is suggested to consider a sustainable and long-term solution to the government's revenue generation, which includes tax revenues.
Financial monetary economy
Farhad Sharifi Bagha; Jafar Haghighat; Zahra Karimi Takanlou
Abstract
1- INTRODUCTIONMonetary policy, as one of the most important economic tools that affects various economic variables through different channels and with different speed and intensity, has always been the attention of the responsible authorities of countries, especially developing countries like ...
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1- INTRODUCTIONMonetary policy, as one of the most important economic tools that affects various economic variables through different channels and with different speed and intensity, has always been the attention of the responsible authorities of countries, especially developing countries like Iran. On the other hand, banks, as financial and credit institutions that have a special place in the country's economy, play a decisive role in the circulation of money and society's wealth. Therefore, examining the impact of monetary policy shocks on the health of Iran's banking system, which is done through the exchange rate channel, is particularly important and is the main goal of this research. Therefore, by using 96 variables of seasonal time series data affecting the bank's profitability index, which is one of the most important indicators of measuring and judging the health of the banking system during the period of 1401:4-1378:1 and using the experimental model of the factor- Added (FAVAR), we investigate the effect of monetary policy through the exchange rate channel on the health of the banking system in Iran. The results show the direct effect of monetary policy through the exchange rate channel on the growth rate of bank network deposits and consequently the power to grant facilities, the amount of bank operating income and the growth rate of bank claims, which from this point of view is one of the most important indicators of the health of the system. A bank that has a profitability index has a negative and significant effect. On the other hand, the effect of monetary policy shocks through the exchange rate channel on the amount of deposit attraction (current, short-term, long-term Rial and foreign currency deposits) and the amount of power to grant facilities and the bank's operating income (income from granting facilities, income from of foreign exchange) is negative and significant and has a positive and significant effect on the amount of claims in the bank.2- THEORETICAL FRAMEWORKAnzwaini et al. (2012) conducted a study aimed at the impact of monetary policy shocks on commodity prices. Global monetary conditions are often cited as a driver of commodity prices. This paper examines the empirical relationship between US monetary policy and commodity prices using a standard VAR system, which is commonly used in analyzing the effects of monetary policy shocks.Jordo et al. (2019) conducted a study with the aim of whether SVARs identify unconventional monetary policy shocks? they did. We show that the used identification schemes have not been able to recover real unconventional monetary policy shocks in the Eurozone. In their identification schemes, information on the size of the central bank's balance sheet is key to distinguishing monetary policy shocks from other shocks that reduce financial market stress.Niazi Mohseni et al. (2019) conducted a study with the aim of investigating the effect of monetary policy shocks and oil revenues on inflation and economic growth in Iran. In this study, the data of the explained variables were used for the period of 1357 to 1397. Data analysis was done using STATA software. The results of this study showed that the increase in the bank interest rate has reduced the economic growth rate for at least two years after the application of the shock, and after that the effect of the shock tends to zero.Asefi et al. (2021) conducted a study on the effect of monetary policy through the asset price channel on financial development. In this study, using seasonal time series data of 110 economic variables in the period of 1370-1390 and self-explanatory model A generalized factor (FAVAR), the impact of monetary policies has been evaluated through the channel of housing and stock prices. The results of the impulse response functions indicate that the housing price channel has increased production in the medium and long term, but it has also had significant inflationary effects in the short and medium term. 3- METHODOLOGYFAVAR model introduced by Bernanke et al. (2005) is a combination of VAR model and factor analysis model. Composite dynamics (Yt, Ft) should be assumed as equation 1.According to the statistical limitations in Iran, the time period investigated in this data research will be the years 2012-2021 and the research variables include three categories:Table 1: Introduction of Xt vector variables, Yt vector exogenous variables and F vector hidden factorsBrief description of the variable Brief description of the variable Rial long term depositLDRLong-term currency depositLDFRial short term depositSDRShort term currency depositSDFriyal current depositsDDRCurrency current depositsDDFLendingloanClaims of non-governmental entitiesDIGovernment claims to the bankDigexchange rateEXCHClaims of other banks and financial institutions to the bankDibIncome from granting facilitiesInlIncome from currency exchangeBcOther variables as hidden factorsبردار The equation can be written as follows using model variables: 4- RESULTS & DISCUSSIONThe results obtained from the findings show that the monetary policy through the exchange rate channel has led to a direct effect on the deposits of the banking network and as a result the power to grant facilities and the amount of non-current bank claims which as a result It has an impact on one of the most important indicators of the health of the banking system, which is the profitability index, and this impact is negative and significant. Also, the effect of monetary policy shocks through the exchange rate channel on the amount of deposit attraction (current, short-term, long-term Rial and foreign currency deposits) and the amount of power to grant facilities and the bank's operating income (income from granting facilities, income from of foreign exchange) is negative and significant and has a positive and significant effect on the number of claims in the bank. 5- CONCLUSIONS & SUGGESTIONSConsidering the importance of the banking sector, in this study, using the FAVAR model, the impact of monetary policy shocks through the exchange rate channel on the health of the banking system of Iran during the years 2012-2021 was investigated.At the beginning, the unit root test was used to measure the significance of the variables using Stata software, and all the variables were at the significance level.In the following, with the help of Schwarz-Baysin, Akaik and Hanan-Quinn criteria, as well as the maximum likelihood statistic, the optimal interval is determined, and since these criteria do not yield the same results, the AIC criterion is used to determine the optimal interval length. and the obtained optimal interval length is specified as one. According to the obtained results, using the FAVAR model is very suitable for measuring the relationships between variables. The results of the model estimation results show that the monetary policy through the exchange rate channel has led to a direct effect on the deposits of the banking network and consequently the power to grant facilities and the amount of non-current bank claims, which is one of the most important the health indicators of the banking system, which is the profitability index, are effective. For this reason, fluctuations caused by monetary policy shocks in the exchange rate, as one of the most important factors affecting the health of the banking system, will have a negative and significant impact.Also, the effect of monetary policy shocks through the exchange rate channel on the amount of deposit attraction (current, short-term, long-term Rial and foreign currency deposits) and the amount of power to grant facilities and the bank's operating income (income from granting facilities, income from of foreign exchange) is negative and significant and has a positive and significant effect on the number of claims in the bank
Financial monetary economy
Niloofar Afkhami Rad; Taghi Ebrahimi Salari; Mehdi Behnameh; Mohammad Javad Gorjipour
Abstract
1- INTRODUCTION
The enabling factor for entering the process of globalization is the creation of a competitive enviroment. The goal is to achieve competitive power through growth, development, and improvement in the quality of life. Competitiveness is the foundation for the economic growth of ...
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1- INTRODUCTION
The enabling factor for entering the process of globalization is the creation of a competitive enviroment. The goal is to achieve competitive power through growth, development, and improvement in the quality of life. Competitiveness is the foundation for the economic growth of countries worldwide, and the real exchange rate is a good indicator for examination of a country's competitiveness in global markets. It is a variable through which we can assess the relative price of traded and non-traded goods. If there are no changes in the relative prices of other countries in the world and the real exchange rate decreases, it indicates a weakening of the international competitiveness of domestically produced goods. High fluctuations and lack of stability in real exchange rates can create an unstable environment for international trade and, as a result, reduce trade. Given the significance of the real exchange rate in influencing other macroeconomic variables and creating an uncertain environment, having knowledge of the future changes in the real exchange rate can play a crucial role in assisting monetary authorities to increase employment levels and stabilize prices.
Since many microeconomic and macroeconomic variables are influenced by the exchange rate, a proper understanding of the linear or nonlinear behavior of the exchange rate can help policymakers, firms, and traders make accurate decisions in order to effectuate desired changes.
2- THEORETICAL FRAMEWORK
The relationship between the national currency and the value of the national currency against foreign currencies is called the exchange rate. In international banking, the term "currency" refers to foreign money, sometimes including the adjective "foreign" to distinguish it from the domestic or local currency of a country. Currency is not limited to banknotes issued by central banks. It includes documents such as checks, drafts, and promissory notes that are used for international payments.
Due to resource allocation based on relative prices in the free market, efficient resource allocation occurs when relative prices are properly adjusted and serve as an indicator of the real value of resources. The exchange rate is one of the most important prices, and deviations from equilibrium can disrupt the prices of other goods and services. Generally, exchange rates are divided into several categories: 1) Nominal exchange rate, 2) Real exchange rate, 3) Effective nominal exchange rate. The nominal exchange rate is the price of one unit of a currency in terms of another currency on a specific day and at a specific time. The mention of a specific time is necessary because the exchange rate may change during different hours of the day. It is common to express the price of one unit of foreign currency in terms of domestic currency in exchange rate calculations.
Changes in the real exchange rate have a significant impact on the balance of payments and the international competitiveness of a country. Economists agree that an inappropriate level of stability for the real exchange rate leads to a decrease in national welfare. Thus, the instability of the real exchange rate from its equilibrium level leads to severe imbalances in the economy.
3- METHODOLOGY
To investigate the nonlinear behavior of the real exchange rate in Iran and in order to examine the nonlinear behavior of the real exchange rate in Iranian economy during the years 2004:04- 2018:02 two models have been applied: Self-Exciting Threshold Autoregressive (SETAR) model and Logistic Smooth Transition Autoregressive (LSTAR) model.
4- RESULTS & DISCUSSION
The possibility of threshold behavior in the real exchange rate has been confirmed by Broock, Dechert, and Scheinkman (1987) and Hansen (1999) test. Subsequently, the threshold values for the growth of the real exchange rate were calculated to be 3.84% in the first model (SETAR) and 5% in the second model (LSTAR).
In the first model, when the growth rate of the real exchange rate is below 3.84%, the growth rate of real exchange rate is minimal and classified as a regime with low growth. If the growth rate of the real exchange rate exceeds the threshold value (3.84%), its stability increases. In other words, when the growth rate of the real exchange rate is severe in Iran's economy, it is expected to be stable.
In the second model, values less than 5% are classified as a regime with low growth, while values greater than 5% are classified as a regime with high growth. The estimated coefficients for different orders in the two regimes indicate that if the growth rate of the real exchange rate is greater than 5%, this variable will exhibit stable behavior. However, at values below the threshold, due to the insignificance of the coefficients, this property will not be applicable.
5- CONCLUSIONS & SUGGESTIONS
The results demonstrated the possibility of nonlinear behavior in the growth rate of the real exchange rate. After calculating the optimal order for AR and considering other econometric requirements (Hansen test), two models, namely SETAR and LSTAR, were estimated. The threshold value was calculated to be 3.84% for the first model and 5% for the second model. In both models, it was observed that as long as the growth rate of the real exchange rate remains in a severe regime, it exhibits significant stability and is positively influenced by its past values.
Financial monetary economy
saeed rahimi; Mahmoud Mahmoudzadeh; parvaneh salatin; Masoud Sufi Majidpour
Abstract
In this study, the effect of banks' performance on economic convergence in the provinces in the period of 2018-2019 has been investigated using spatial econometrics. The results of the estimation of the models showed that the ratio of facilities to bank deposits as an indicator of banking performance ...
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In this study, the effect of banks' performance on economic convergence in the provinces in the period of 2018-2019 has been investigated using spatial econometrics. The results of the estimation of the models showed that the ratio of facilities to bank deposits as an indicator of banking performance and monetary indiscipline have a negative and significant effect on economic convergence in the provinces. The speed of convergence of conditional beta estimated by considering bank indices is higher than absolute convergence.Also, real capital stock, human capital and Internet penetration rate have a positive and significant effect and the rate of economic participation has a negative and significant effect on economic convergence. Investigating the effects of spillovers in 2018 showed that the spillover effect of banking performance on neighboring provinces was positive. Also, with the increase in the distance between the provinces, the spillover effect has decreased, in fact, the spillover effects on the neighboring provinces are more than the provinces that are located at a further distance.
Financial monetary economy
Sayed Abolfazl Vaziri; Abbas Yazdani; Mahdi Sadeghi
Abstract
1- INTRODUCTION
Compulsory loan and its macroeconomic effects, especially its effect on inflation, have always been discussed by economists in Iran. In the current research, the effect of credit compulsory loan on inflation has been evaluated. In order to estimate the model we used data from ...
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1- INTRODUCTION
Compulsory loan and its macroeconomic effects, especially its effect on inflation, have always been discussed by economists in Iran. In the current research, the effect of credit compulsory loan on inflation has been evaluated. In order to estimate the model we used data from 1990-2018. The data have been measured by using vector autoregression (VAR) method. According to the results of the research, it is suggested to replace the policy of granting compulsory loan with other existing policies such as product coupon and purchase remittance in the field of supporting weak households and value chain financing to increasing supply.
2- THEORETICAL FRAMEWORK
Compulsory loan is a loan that is imposed on the banking system according to the notes of the budget laws and other laws. In other words, banks are responsible for granting assigned loans based on the approvals of authorities outside the banking system. These loans are one of the government's policies to support the vulnerable sections of the society. Every year, in note 16 of the country's budget, a decision is made by the government and the parliament in relation to the debt relief.
3- METHODOLOGY
In this research, the data is time series. To analyze the data we choose from various models of the vector autoregression (VAR), which is actually an unrestricted method in econometrics. the vector of variables is a function of its own intervals and other endogenous variables. The vector autoregression method has the following feature: all variables in this model are endogenous, the results of the model in many cases are better than the results of complex models; It is like simultaneous equations, estimation of the model is simple.
4- RESULTS & DISCUSSION
According to the tests, it has observed that a one percent increase in the compulsory loan will increase the consumer price index by 0.4 percent; one percent increase in the nominal interest rate also leads to a 1.25% increase in the consumer price index. Also, the effect of the instant shock of the loan facility rate on the consumer price index and the nominal interest rate is not significant. Next, in the analysis of variance method, the contribution of impulses entered on the model variables was evaluated and it was found that in the 5 first periods (of 10 periods) the largest prediction error of the consumer price index rate variable is explained by the LCPI variable. From the 6th period to the 8th period, however, the explanatory contribution of the nominal interest rate is higher. In the 9th and 10th periods, the compulsory loan rate has the largest contribution in explanation the variable prediction error of the consumer price index.
5- CONCLUSIONS & SUGGESTIONS
The budgeting system directly and indirectly affects monetary policies. One of the channels of this influence can be followed in the budget notes. Every year, in some laws of the country, especially in the annual budget laws, the banking system is burdened with tasks, and in some of these cases, due to the preferential rate of these loans, or in other cases, due to the high default of these loans, the country's banking system has suffered imbalance. In this regard, increasing of the monetary base was not only through the growth of banks' balance sheets. Rather, the financial dominance of the government and the impact of financial rulings on the balance sheet of the central bank in the form of borrowing from the central bank, buying government bonds has also caused the expansion of the government's debt and the net foreign assets of the central bank, as well as the monetary base.
