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The aim of this paper is to investigate empirically the effects of monetary policy on poverty and income distribution in Iran using the data over the period 1976-2005. Monetary policy is one of the most potent instruments for managing the economy. There is a useful question to ask if the monetary policy is used as an instrument to reduce poverty. Most of the existing literature on monetary policy and poverty focuses on the short run. Monetary policy affects most of the macroeconomic variables such as output, unemployment, and inflation. Moreover, anticipated inflation and unanticipated inflation redistribute differently income from creditors to debtors. If poverty and inequality respond to these macroeconomic variables, monetary policy affects the well-being of the poor. The findings of this study show that monetary policy cannot be used as a poverty alleviation policy in Iran, since the expansionary monetary policy followed commonly by expansionary fiscal policy results in a rise in budget deficits. This policy increases the aggregate demand for all the goods and services in the economy resulting in higher inflation. Furthermore, there is no significant link between monetary policy and investment through interest rate. Consequently, monetary policy has no supply side effects in the economy and just it increases inflation rate. As a result of expansionary monetary policy, the poor would find its real income being gradually eroded by the growth in money supply, and hence the possibility of running into poverty.

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Monetary conditions index (MCI) is used as an intermediate target of monetary policy in many developed countries. More recently, monetary authorities in some developing countries have also attempted to use this operational target to determine the stance of monetary policy in their countries. The MCI is usually computed as a weighted sum of changes in interest rate and exchange rate. The use of interest rate in constructing MCI might not be appropriate in developing countries due to the lack of efficient financial markets in these countries. Some authors have emphasized on the role of credit channel in monetary transmission mechanism for developing countries. Using weighted sum of profit rate, exchange rate and banks credit, this paper constructs proper MCI for the Iranian economy. Aggregate demand and price equations are used to estimate the weights. Finally, the forecasting power of these indices using non-nested tests and root mean square errors is compared. The results show that the MCI augmented with banks credit has better predicting power than those without credit channel. Moreover, it is also revealed that real MCI, as an intermediate target, is preferred to nominal ones.

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Today, policymakers and economists use widely rational expectations (RE) in monetary, financial and regulatory policies to improve their country economic performance. In some of the pertinent models to these policies, expectations have been formed by assuming rationality and full information on economics. Indeed, economic agents have no perfect information about some parameters of these models. These unknown parameters can be estimated in the form rational expectations during learning process. In this research, the impact of government policies on the inflation rate has been modeled on the basis of rational expectations under learning process. Data has been gathered from Central Bank of Iran (CBI) and Iran’s economic development plans over the period 1989-2009. Results show that current inflation in the country originates mainly from economy structure and government policies, so share of public inflationary expectations is negligible. In addition, the learning process in Iran will converge to rational expectations, thus government policies for reducing inflation and increasing employment are inefficient. It is recommended that government adopt unanticipated and sudden policies to be effective its plans.

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Regarding the differences among firms on financial position and access to various financial resources, the selection of a proper variable, which represents actual cost of capital of a firm, is of great importance in explaining the firms demand for money.  In order to improve the estimation of interest rate elasticity of demand for money by manufacturing firms, this paper computes the cost of capital for each firm. Using firm level panel data for 161 manufacturing companies listed in Tehran Stock Exchange, the demand for money is estimated over the period 2000 to 2010. It is found that (a) the firms in which the cost of capital is higher, have low real balances; (b) the average cost of capital and its variations implies that the weight of cost of capital should be reexamined by monetary authority; and (c) the sensitivity of demand for money to fluctuations in wage  is more than to interest rate.

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Expansion of financial markets including capital market is a key factor in increasing investment, which affects significantly the economic growth and development. Any change in monetary policy will influence real sector of economy, prices and returns on stocks. The performance of stock market is of considerable effect on macro economy, and plays substantial role in the monetary policy transmission process. In this paper, we examine the effect of monetary policy on the stock market using a five-variable structural vector auto-regressive model by applying monthly data during March 2005 to March 2013. The results suggest that the monetary policy through liquidity and loans directed to private sector is of significantly positive effect on the stock market index. As a result, expansionary monetary policy by increasing the liquidity and loans directed to the private sector improves stock market general index. In addition, changes in monetary policy through exchange rate and real interest rate have significant and negative effects on this index. The contractionary monetary policy through interest rate improves stock market index. Finally, shocks resulting from changes in exchange rate exacerbate the monetary policy in the short term, which in turn worsen the stock market index.

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This article attempts to examine the impact of stock market fluctuations on macroeconomic variables by designing a New Keynesian approach in a dynamic stochastic general equilibrium (DSGE) model. For this purpose, first, model parameters are estimated based on Bayesian approach and using of quarterly data from 1994 to 2014. Second, the impulse response functions of variables to innovations in stock price index, monetary shock, technology shock, consumer spending and public investment are investigated. Then, the optimal weights related to inflation gap, output gap and the stock price index gap within the monetary policy function are extracted. According to the results, a shock to stock price index has a negligible effect on inflation and output variables. This may be due to the small size of the stock market in Iran. Finally, the optimal coefficients are determined for inflation and output gaps, stock price index gap, and the central bank deadweight loss under various scenarios. Based on findings, first, the central bank should attribute more weight to inflation in itself reaction functions. Second, a scenario in which the weight of stock price index is zero has less deadweight loss, thus the response of the central bank to stock price index gap leads to a reduction in social welfare. Therefore, when the stock market is booming, the central bank is recommended not to be intervened to reduce liquidity.

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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.

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Today, achieving financial stability alongside stabilizing inflation and output is of particular importance among monetary policymakers and regulatory authorities. In this study, a Dynamic Stochastic General Equilibrium Model was used for the period 1990: 1 to 2014: 4 in the economy of Iran, in which a measure of financial shock was also introduced. In this model, the financial shock is modeled as a reduction in external financing premium of the firm. Comparison of the performance of policy rules showed that following an expansionary financial shock, macro-prudential policy regime, in which instruments of monetary policy and macro-prudential policy deal with excessive growth of credit, leads to a significant reduction in the external financing premium of the firm.  This in turn leads to less volatility in economic variables, such as inflation and output. This would improve the welfare in the Economy of Iran.

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Improving the distribution of income is one of the main goals of governments in economic policy, regardless of the orientation of different systems. The purpose of this study is to investigate the distributive effects of monetary policy on income distribution in urban and rural areas of Iran. In this regard, the values of macroeconomic variables during the period of 1959-2014 and the household budget data over the period of 1997-2014 were used. The monetary policy was considered in three scenarios, including the increase in facilities granted to the private sector, the decrease in the reserve requirement ratio and decrease in the excess reserves ratio. The results showed that expansionary monetary policy improves the distribution of income in the short run, but in the long run it worsens the distribution of income due to its inflationary effect. An increase in facilities granted in the short term reduces the Gini coefficient in urban and rural areas, and whole country. However, it increases the Gini coefficients in all three sections in the long run. Reducing the reserve requirement ratio in the short run reduces Gini coefficients, but it does not change the whole Gini coefficient in the long run, but it increases the Gini coefficients in urban and rural areas. The effect of reducing excess reserves ratio is similar to that of reducing reserve requirement ratio.

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The purpose of this study is to investigate the impact of adding a non-Ricardian household to a DSGE model in choosing the Ramsey optimal monetary policy and consequently the effects on macroeconomic variables (such as output gap, consumption gap, inflation, and rising nominal exchange rate). Therefore, after estimating a model for the Iranian economy, the Ramsey optimal monetary policy was selected from 6 monetary policy alternatives. Then, in two scenarios, a non-Ricardian household is added to the model. In the first scenario, the non-Ricardian household consists of 20% of households and in the second, it consists of 40% of households. Then, Ramsey optimal monetary policy was selected for these two scenarios. The results show that the when the percentage of non-Ricardian households in the model increases, monetary policy-maker deviates from targeting monetary variables and gives more importance to production targeting. Second, if Ramsey optimal monetary policy is chosen without considering the non-Ricardian household in the model, in facing the shock of falling oil prices, the shock of declining money demand and the shock of rising external inflation, the responses of the production and consumption sectors in scenarios 1 and 2 are significantly different from the baseline model. But the consumption and production sectors have almost the same reactions in three models in response to the shock of the rising nominal exchange rate.

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Aim and Introduction:
The distribution of income and wealth in Iran is highly dependent on monetary policy. Iran's macroeconomic variables show that the country is experiencing an increase in inflation, liquidity and social inequality. Given that the facility repayment rate plays a role in channeling resources to investments, and given the role of the central bank in determining and regulating this variable in Iran, this study examines the impact of changing the facility repayment rate as a monetary policy tool on macroeconomics variables related to the distribution of income and wealth in society. The contribution of this research is to provide the agent-based model for Iran and to study the effects of different scenarios of decreasing, increasing and constant trend of facility repayment rate on the distribution of income and wealth, and other macroeconomic variables.
Methodology:
Two types of approaches can be used to model this problem: (1) simulation with the Dynamic Stochastic General Equilibrium (DSGE) approach and (2) simulation with the Agent-based Computational Economics (ACE) approach. DSGE models seek to find the optimal point, in which pricing is done through aggregating supply and demand by the Walrasian auctioneer, and none of the factors can decide on their variables. While in ACE simulations, changing process of variables and factors is examined and each factor has the ability to decide about its variables based on its observation of the system. The ACE approach has been used because of the proximity of the simulation to reality and the ability to examine the process. In this simulation, the effect of changing the facility repayment rate on the distribution of income and wealth and other macroeconomic variables is examined in three scenarios: decreasing, increasing and fixed facility repayment rate. 
Agents that are considered in the proposed simulation are: (1) The Central bank as policy-maker agent that decides about facility repayment rate and money supply volume, (2) The bank is responsible for allocating credit to firms and depositing from households and distributing income from banking activities among depositors. It is also the responsibility of the bank to sell consumer goods and capital of bankrupt companies that have not been able to repay their facilities, (3) Firms are responsible for the production of consumer goods and capital and its sale in the market, and (4) A household that provides its labor force to firms in exchange for wages and provides consumer goods for its livelihood in the consumer goods market. In this simulation, policy-making is done by the central bank and the existence of the government, and fiscal policies are ignored and only the mentioned monetary policy (facility repayment rate) is investigated.
In this research, the market is defined in a way that each agent on the demand side observes a random list in terms of number of factors on the supply side and buys from the supplier agent that offers the lowest price. Model have 4 markets as follows: (1) the labor market, (2) consumer goods market, (3) capital goods market, and (4) credit market. The characteristic of this type of market is that the market mechanism is a random adaptation mechanism, and all agents on the demand side have incomplete information from suppliers and vice versa. None of agents see all the market prices and decide to buy only on the basis of incomplete observations of the system. Also, on the supplier side, the firm does not see the cumulative need of the market. It means that the firm estimates the amount of production for this period based solely on its own personal experience in the previous periods, and according to that estimate, it employs labor and produces goods and services. And firms set prices based on their experience on previous periods. This kind of market attitude in simulation has caused the simulated market to be closer to the real world.
Results and Discussion:
The result of this simulation shows that the repayment rate of incremental scenario caused the collapse of the simulation system and also the Gini coefficient increased, which indicates the disparity in the distribution of income and wealth in society. The fixed scenario does not show an effect on improving the Gini coefficient and on the other hand causes the bankruptcy of many firms in the long run. The best result is the reducing scenario. In this scenario, the system achieved sustainable economic growth, controlled liquidity, and a reduction in the Gini coefficient.
Conclusion:
In the absence of speculative markets, all the money generated in the banking system is directed to the production and development of economic activities. In addition, decreasing repayment rate of facilities can improve the distribution of income and wealth in society.
 

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Aim and Introduction:

The choice between interest rate and money supply as the objective of monetary policy has always been a question in economic literature. Based on the results of many economic studies, the interest rate is a more appropriate target. Due to the instability of the demand for money, since the mid-1980s, the money supply has lost its generality, and instead, the use of interest rates has been used.

 In Iran's economy, due to the prohibition of using bonds because of their usurious nature and determining the interest rates of bank deposits in a mandatory manner, it has not been possible to use the interest rate as the goal of monetary policy in recent years. In most of the researches, the monetary base growth rate is used as the target of the central bank's monetary policy.
This research tries to use dynamic stochastic general equilibrium approach in Iran, to examine the effects of implementing monetary policy through the regulated interbank interest rate and transaction of government debt securities and to compare its effects on the macroeconomic variables with the effects of common monetary policy of the central bank (setting the growth rate of the monetary base through changing the rate legal reserve).
Methodology:
In this research, a stochastic dynamic general equilibrium model of an open economy has been designed to analyze the effects of different monetary policy regimes on the macro variables of the Iranian economy. This model analyzes the characteristics of the Iranian economy such as the dependency on oil revenues, the persistent budget deficit and the misalignment of central bank's balance sheet. Also, based on the new Keynesian school, price stickiness has been considered in the model by Calvo's method (1983) for domestic, import and export intermediary companies.
Results and Discussion:
According to the graphs of impulse-response functions, as a result of the positive impulse of the interbank interest rate, the demand of banks for borrowing and the monetary base are reduced. The bank resources are limited, and the facilities granted to the companies are reduced. Due to the stability of the company's demand, as a result of the additional demand for facilities, the interest rate of the facilities will increase.
By reducing the facilities granted to companies, the company must hire fewer factors based on optimization due to the higher cost of financing. The demand and wages of household labor will decrease. Due to the decrease in the demand for labor and capital by the company, the non-oil production also decreases. As a result, the inflation rate increases with the decrease in supply. On the other hand, with an increase in the real interest rate based on Euler's relationship and a decrease in household income due to a decrease in wages and employment of labor by companies, consumer spending decreases. Therefore, in response to the decrease in the demand of the whole economy, the price level gradually decreases and the economy returns to equilibrium. Due to the fact that in the model, imports are limited to consumer goods, with the reduction of household consumption expenses, imports also decrease.
According to the graphs of the impulse response function, with the increase in the growth rate of the monetary base, the resources available to banks increase, and bank facilities get available to companies in order to cover expenses. The facilities granted to the companies will increase, and due to the constant demand of the company, the cost of financing will decrease by reducing the interest rate of the facilities. As a result of optimization, by reducing the final cost of hiring agents, the company should employ more agents. So, the demand for household labor will increase. By hiring more factors by the company, non-oil production in the economy increases after impulse.
Conclusion:
The positive impulse of the interest rate of the interbank market (as a contractionary policy of the central bank) has a negative effect on the non-oil production by increasing the cost of financing of companies and reducing the facilities granted. As the supply of the entire economy decreases, the inflation rate also increases after the impulse is applied.  
The positive momentum of the growth rate of the monetary base (as the central bank's expansionary policy) is expected to increase the lending of banks, and to reduce the interest rate of the facilities, if bank resources increase. 
By comparing these impulse response functions under the application of each monetary policy regime, it seems that the effect of the impulse of the monetary base growth rate compared to the impulse of the interbank interest rate on the economy disappears in shorter periods.
These results are expected due to the fact that the targeting of interbank interest rates has less effect on the macroeconomic variables in Iran due to the restrictions on the issuance of government debt bonds and the implementation of open market operations by the central bank. 

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