The effect of Monetary Policy on the GDP by the Loan Channel of Bank System in Iran
Subject Areas : Labor and Demographic Economics
Keywords: vecm, Credit Channel, Loan Channel, Bank Debts,
Abstract :
Authorities and economists always try to use suitable monetary and financial tools to achieve economical development. About monetary policies, usually, the central bank tries to use means like legal reserve rate, bands and high rate of discount affecting the cash to provide the development facilities. Monetary policies affect the production and inflation by different channels such as interest rate, exchange rate and the price of the other assent and credits that are the most important of these channels. The aim of this research is to consider the effect of the monetary policy on the production and inflation through bank credit channel (Loan Channel) during 1368-1387 in Iran. So the effect of monetary policy will be considered through bank loan channel by Vector Error Correction model (VEC). In general the results show that with increasing the amount of money by developing bank debts to the central bank, only the production level will be expanded in short-term and even it has negative effect on in long-term. But the general level of prices will be increased in short and long-term. So, the use of this policy tools affecting the level of the production is not suitable but it can help as an anti-inflationary policy.
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