Investigating the impact of economic stabilization policy on investment in Iran within the framework of the stochastic dynamic general equilibrium model
Subject Areas : EconomicMousa Masoumzadeh 1 , Roya aleemran 2 , Sima Eskandari Sabzi 3
1 - PhD student, Department of Economics, Middle Branch, Islamic Azad University, Middle, Iran.
2 - Department of Economics, Tabriz Branch, Islamic Azad University, Tabriz, Iran
3 - Assistant Professor, Department of Economics, Islamic Azad University, Middle Branch, Middle, Iran
Keywords: General equilibrium model, economic stabilization, investment, stochastic dynamic general equili brium model ,
Abstract :
In this research, firstly, an open economy model including demand, supply, and policy-making sectors has been modeled and designed, and then the structural parameters of the model have been estimated using seasonal data from 2010-2020. After estimating the parameters of the model by simulating financial and monetary shocks, their effects on economic welfare variables were investigated. Based on this, due to the assumption of price stickiness, an expansionary monetary policy in the form of increasing the monetary base can increase real variables in the short term, which include consumption, investment, capital, and production. Therefore, if the monetary policy maker's tool includes one of the monetary aggregates, then by changing it, we can see its effect on real variables in the short term, but in the long term, we may see the neutralization of money by adjusting the price level, and therefore the real effects. Such a policy will fade. The theoretical results of solving the money model in the utility function using the optimal control method indicate that with the decrease in the money growth rate, the nominal interest rate and inflation will decrease and lead to an increase in real money balances; But it does not affect the level of production and consumption of the uniform situation. As a result, with the decrease in the rate of monetary expansion, the welfare level of the situation increases uniformly. Also, the results of valuing the parameters of the model based on the facts of Iran's economy and sensitivity analysis show that by reducing the growth rate of money supply from 22% in the basic state to 12% during 10 periods in a uniform state, it causes a decrease in the inflation rate from 46/ 19% has become 10.57%. Also, the real balances of money per capita increased from 0.1304 to 0.1352 and the level of welfare per capita increased from 129.17 to 160.17. In the framework of the money model, in the utility function, per capita production and per capita consumption do not change. This research can help policymakers make better decisions to improve investment conditions and economic growth by better understanding the effects of economic stabilization policies.
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