Investigating the Impact of National Currency Value Shocks on the Inflation Structure and Unemployment of the New Keynesian Model Using a Dynamically Computable General Equilibrium Approach

الموضوعات :

Hediyehsadat Mirsharafodini ¹ (Department of Economics, Kerman Branch, Islamic Azad University, Kerman, Iran)
Abdolmajid Jalaee ² (Department of Economics, Faculty of Management and Economics, Shahid Bahonar University of Kerman)
Mohsen Zayandehroodi ³ (Department of Economics, Kerman Branch, Islamic Azad University, Kerman, Iran)

تاريخ الإرسال : 07 الأحد , شوال, 1443 تاريخ التأكيد : 26 السبت , ذو القعدة, 1443 تاريخ الإصدار : 16 الجمعة , صفر, 1445

الکلمات المفتاحية: Dynamically Computable General Equilibrium, National Money Shocks, Inflation and Unemployment Structure, Keynesian Model,

ملخص المقالة :

The direct effect of shocks is to create uncertainty in economic variables. These unpredictable fluctuations influence all economic decisions of the government and the private sector. Also, the formation of people's expectations causes these shocks to have dynamic effects on all economic variables. Inflation is a general, disproportionate, and self-inflicted rise in prices that is often irreversible. The purpose of this study is to investigate the structure of inflation and unemployment of the new Keynesian model with a dynamic general equilibrium approach. Also in this study, dynamic CGE models of long-term relationships related to the decisions of economic institutions such as households and investors were used. Data were analyzed using the proposed practical models. According to the results, inflation in the whole country increases with currency shock. The stronger the currency shock, the stronger the consequent increase in inflation. But unemployment is temporarily reduced by a currency shock.

المصادر:

[1] Ghorbani, Z., Ghorbani, M., Tavakoliyan, H., Shahnoshifroshani, N., The effect of economic shocks on agriculture macroeconomic variables using dynamic stochastic general equilibrium model, Iranian Journal of Trade Studies, 2016, 20(80), P. 75-119. Dor: 20.1001.1.17350794.1395.20.80.4.7

 

[2] Rousta, E., Mirzamohammadi, S., Mehregan, N., Eskandariata, M., The Impact of Indirect Tax on the Income Distribution in Iran: Computable General Equilibrium Model (CGE), Economic Development Policy, 2016, 4(2), P. 107-132. Doi: 10.22051/edp.2017.10042.1040

 

[3] Ghafari F, Naemy Pajoh H. An Investigation into the Impacts of Internal and External Shocks on Inflation in Iran. QJERP. 2012, 20 (62), P. 117-142.

 

[4] Mohammadi M., Yaqubi H.R., Causes of Inflation in the Iranian Economy: A Case Study, National Conference on Macroeconomics of Iran. Gonbad Kavous University, 2016.

 

[5] Motafakker Azad, M., Mamipour, S. Economical - Political Analysis of Barriers of Natural Resources Abundance Effect on Economic Growth. Quarterly Journal of Applied Theories of Economics, 2013, 1(1), P. 97-124.

 

[6] Khoshroo, A., Izadikhah, M., Improving efficiency of farming products through benchmarking and data envelopment analysis, International Journal of Management and Decision Making, 2019, 18(1), P.15-30.

 Doi: 10.1504/IJMDM.2019.096691

 

[7] Izadikhah, M., Financial Assessment of Banks and Financial Institutes in Stock Exchange by Means of an Enhanced Two stage DEA Model, Advances in Mathematical Finance and Applications, 2021, 6(2), P. 207-232.

 Doi: 10.22034/amfa.2020.1910507.1491

 

[8] Mehrara M., Barkhordari, S., The Impacts of Iran's joining the WTO on Employment and Value Added of Economic Sectors (CGE/AGE Approach), Journal of Economic Research (Tahghighat- E- Eghtesadi), 2007, 42(3), P. 171-194. Dor: 20.1001.1.00398969.1386.42.3.8.2

 

[9] Bils, M., Klenow, P.J., Does Schooling Cause Growth? American Economic Review, 2000, 90(5), P. 1160-1183)

 

[10] Izadikhah, M., Financial Assessment of Banks and Financial Institutes in Stock Exchange by Means of an Enhanced Two stage DEA Model, Advances in Mathematical Finance and Applications, 2021, 6(2), P. 207-232.

Doi: 10.22034/amfa.2020.1910507.1491

 

[11] Cagan P., The Monetary Dynamics of Hyperinflation, In: Frideman M, ed, Studies in the Quantity Theory of Money, Chicago: The University of Chicago Press, 1956.

 

[12] Clarida, R., Gail, J., Gertler., M., The science of monetary policy: Anew Keynesian perspective, Journal of economic Literature, 1999, 37(4), P.1661-1707. Doi: 10.3386/w7147

 

[13] Goodfriend, M., King, R., The New Neoclassical Synthesis and the Role of Monetary Policy, NBER Macroeconomics Annual, 1997, 98(5), P. 231-283. Doi: 10.1086/654336

 

[14] Mitra, S., Early warning prediction system for high inflation: an elitist neuro-genetic network model for the Indian economy, Neural Computing & Applications, 2012, 22, P. 1-16, P. 5–18. Doi: 10.1007/s00521-012-0895-4

 

[15] Roostaee, R., Izadikhah, M., Hosseinzadeh Lotfi, F., An interactive procedure to solve multi-objective decision-making problem: an improvment to STEM method, Journal of Applied Mathematics, 2012, 324712, P. 1-18.

Doi: 10.1155/2012/324712

 

[16]Izadikhah, M., Farzipoor Saen, R., Solving voting system by data envelopment analysis for assessing sustainability of suppliers, Group Decision and Negotiation, 2019, 28(3), P. 641-669. Doi: 0.1007/s10726-019-09616-7

 

[17] Muth, J.F., Rational Expectation and Theory of Price Movements. Econometrica, 1961, 29(3), P. 315 – 335.

Doi: 0012-9682(196107) 29:3<315: REATTO>2.0.CO;2-G

 

[18] Nakamura, D., World Bank estimates Japan damage up to $235 billion; Smoke rises from nuclear plant. Washington Post, 2011.

 

[19] Svensson, L. E. O., Woodford, M., Implementing optimal policy through inflation-forecast targeting, in: Bernanke BS, Woodford M (eds) The inflation targeting debate, University of Chicago Press: Chicago, 2005.

 

[20] Taylor, J. B., Using monetary Policy Rules in Emerging Market Economies, The 75th Anniversary Conference at the Bank of Mexico, 2000.

 

[21] Zare, R., Izadikhah, M., Multi-criteria decision making methods for comparing three models of aluminum ingot production through life cycle assessment, Applied Ecology and Environmental Research, 2017, 15(3), P. 1697-1715, Doi: 10.15666/aeer/1503_16971715

 

[22] Zangenehmehr, P., Farajzadeh, A., On Solutions of Generalized Implicit Equilibrium Problems with Application in Game Theory, Advances in Mathematical Finance and Applications, 2022, 7(2), P. 391-404.

Doi: 10.22034/amfa.2021.1935453.1617