Optimum rate of Money Growth in New Keynesian DSGE Framework for Iran Economy
Subject Areas : Labor and Demographic Economics
Keywords: Inflation, welfare, Optimum Rate of Money Growth, Friedman Rule, New Keynesian model, DSGE,
Abstract :
In this paper I have been calculated the optimum rate of money growth in New Keynesian DSGE framework for Iran Economy. The presented model includes three economic agents: a government, i households and j firms. Households and firms have monopolistic power of labor and good supply, this facilitates the specification of Nominal and real rigidities and these are specified subject to Rotenberg quadratic adjustment cost function. Simulation results demonstrate that Friedman's Rule is not supported in Iran economy, and in this framework the optimum seasonal rate of inflation and money growth is %2 and %3.003 respectively.
In this paper I have been calculated the optimum rate of money growth in New Keynesian DSGE framework for Iran Economy. The presented model includes three economic agents: a government, i households and j firms. Households and firms have monopolistic power of labor and good supply, this facilitates the specification of Nominal and real rigidities and these are specified subject to Rotenberg quadratic adjustment cost function. Simulation results demonstrate that Friedman's Rule is not supported in Iran economy, and in this framework the optimum seasonal rate of inflation and money growth is %2 and %3.003 respectively.