Volume 18, Issue 4 (2018)                   QJER 2018, 18(4): 187-316 | Back to browse issues page

XML Persian Abstract Print


Download citation:
BibTeX | RIS | EndNote | Medlars | ProCite | Reference Manager | RefWorks
Send citation to:

BAJELAN A A, bayat R, ansari samani H. The Role of Financial Development in the Effectiveness of Monetary Policy during Business Cycles: An Application of Markov-Switching Model. QJER. 2018; 18 (4) :187-316
URL: http://journals.modares.ac.ir/article-18-15370-en.html
1- Ph.D. Candidate in Economics, Mazandaran University, babolsar, Iran , bajelanaliakbar@yahoo.com
2- Associate Professor of Economics, International University of Imam Khomeini, Qazvin, Iran
3- Assistant Professor of Economics, Yazd University, Yazd, Iran
Abstract:   (1246 Views)
Monetary policy is an effective tool in influencing the macroeconomic variables such as production, employment and the general level of prices. The theoretical literature and empirical evidence show that the effects of monetary policy on macroeconomic variables are asymmetric depending on the level of development and depth of financial markets. The aim of this study is to evaluate the role of financial development in the effectiveness of monetary policy on real output growth during business cycles. To this end, the effect of monetary policy on the real output growth is examined by applying a Markov-switching model and using the quarterly time-series data of Iran during 2001:1 to 2013:4. The results show that the effect of monetary policy on the real output growth during the recessions is significant and positive, while it is insignificant in the boom periods. In other words, the effect of monetary policy on the real output growth is asymmetric. Moreover, the results show that the net effect of monetary policy on the real output growth during business cycles depend on the level of financial development. During business cycles, if the level of financial development increases, then the effects of monetary policy on real output growth will decrease.
Full-Text [PDF 1008 kb]   (354 Downloads)    
Article Type: Research Paper |
Received: 2016/06/12 | Accepted: 2018/12/16 | Published: 2018/12/16

Add your comments about this article : Your username or Email:
CAPTCHA

Send email to the article author