Monetary & Financial Economics

Measuring the distributional effects of monetary policy shocks on macroeconomic variables using the DSGE model

Articles in Press

Document Type : Original Article

Authors

Sahar Mokabberi 1
Narges Salehnia 2
Ali Cheshomi 3

1 PhD Candidate Ferdowsi University

2 Associate Professor، Economics Economics and Administrative sciences Department Ferdowsi University

3 Professor، Economics Economics and Administrative sciences Department Ferdowsi University

https://doi.org/10.22067/mfe.2025.95582.1611
Abstract
The aim of the present study was to investigate the distributional effects of monetary policies in the Iranian economy using the dynamic stochastic general equilibrium (DSGE) model. In this study, the distributional effects of monetary policy were investigated in the form of designing a dynamic stochastic general equilibrium model with heterogeneous households in terms of liquidity constraints and liquidity non-constraints. In this regard, statistical data for the period 1990-2024 were used. The financial asset channel is considered as one of the most important channels of monetary policy transmission to the real sector of the economy. Improving the distribution of income has always been an important goal that has been considered by political and economic policymakers. The results of the estimated model indicated that the monetary policy shock led to a worsening of income distribution among households. In addition, the shock increased the value of financial assets in households without liquidity constraints, and led to a decrease in consumption and income in households with liquidity constraints due to lack of access to financial markets and financial assets. Based on these results, it can be said that inappropriate monetary policies can exacerbate class gaps. Increased liquidity without proper control increases inflation and reduces the purchasing power of low-income groups, while holders of financial and capital assets (such as real estate and stocks) benefit from increased asset prices.

Keywords

Monetary policy
distributional effects
income
financial assets
dynamic stochastic general equilibrium model
Subjects
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Monetary & Financial Economics

Articles in Press, Accepted Manuscript
Available Online from 09 December 2025

  • Receive Date 22 September 2025
  • Revise Date 19 November 2025
  • Accept Date 03 December 2025

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