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The locus paper in topic “Expectations and Neutrality of Money” (1972) is a seminal paper. This article was written in Over Lapping Generation (OLG) model with received from rational expectations and to draw up in stochastically mathematic. Results of this paper were reference to Phillips Curve as a solution of the equilibrium systems. From Lucas paper time to now, many of studies was proceed to Lucas model and results, But nor of them no attention to his results in non stochastic space, stochastic allocation of old people and growth existence in labor force. Central question of our study is test of results and behavior of Locus base model with these subjects. Method of our study is using of mathematical solutions and foundation analysis. The most important result of our study is this: The results of this study by criticism and expansion in Lucas model will acquire some of contributions in OLG models. This results show that some of Lucas results will impressible when we change its basic assumption, but we can’t use Lucas results in price equation for supported and analysis of classical school theorems.

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The theory of quantity of money in that there exists a one-to-one relation between money growth and inflation, that means a highly and a continuous of rate of money growth leads to a high rate of inflation. During the recent years with the divergence of growth of money from inflation in the Iran economy leads to the opinion that an interruption has occurred between the growth of money and inflation. By the way, the main objective of this paper is to investigate the relationship between the growth of money and inflation by using the data of the 1350-2005 periods. The model that was used to investigate the relation of growth of money and inflation is a model that stemmed from quantity theory of money and is combining with the Phillips curve to model inflation to be linked trough expectations. The results revealed there exist a stable relationship between the growth of money and inflation and this states that in the long run one percent increase in the growth of money will increase inflation by 0.89 percent.

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The purpose of this paper is estimating output gap as one of the variables that affect inflation in the Iranian economy. Therefore, using seasonal data from spring 1989 to winter 2006 and through Hodrick-Prescott filtering techniques the potential output and output gap are estimated and then ordinary least squares approach has been used to find out the relationship between inflation and output gap. Variables such as exchange rates, price index of imported goods, and the adjusted output gap as real variables and expected future inflation have been used for estimating the model considering the facts and theories in the Iranian economy. This test has been done through the rational expectation hypothesis of an enterprise and using a new Keynesian Phillips curve. The research findings verify the new Keynesian opinion. Thus, in Iran where the average rate of inflation in the period, is 19.6% and therefore considered among the countries with galloping rate of inflation, Phillips curve has been estimated with a relatively steep slope. In the long run, the steep Phillips curve according to Keynesians implies that in case of demand shock, the production will increase and compared with the new classic models it has less impact on inflation.

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In the present study, the New Keynesian Phillips Curve is derived for Iran using an Open Economy Dynamic Stochastic General Equilibrium model. Due to inflation persistence in Iran, a new hybrid Keynesian Phillips curve is estimated using Central Bank of Iran dataset during 1971-2011. The findings indicate that lagged inflation is more important than expected inflation in determining current period inflation. In addition, with reference to monetary shocks, the inflationary effects are greater than real effects. In other words, a monetary shock initially affects inflation more than output. Moreover, shocks on oil revenue and technology lead to increase in both output and inflation. A reduction in the nexus between monetary base and oil revenues, investment in research and development (R & D) and monetary discipline are policy recommendations of this research.