List of articles (by subject) Monetary Economics
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Open Access Article
1 - The non-linear effect of liquidity and debt repayment on banks profitability in Iraq
Kiumars Shahbazi Mohammad Ali Mahdi AbedThis paper seeks to explore the nonlinear association between liquidity indicators and debt repayment capacity in relation to asset returns. For this purpose, the Panel Smooth Transition Regression (PSTR) method was employed to examine the nonlinear impact of liquidity MoreThis paper seeks to explore the nonlinear association between liquidity indicators and debt repayment capacity in relation to asset returns. For this purpose, the Panel Smooth Transition Regression (PSTR) method was employed to examine the nonlinear impact of liquidity indicators (including the ratios of current assets to total deposits, total loans granted to total deposits, and total loans granted to total assets and debt payment capacity indicators (such as the debt ratio and interest coverage ratio) on asset returns from 2011 to 2020. The findings revealed a nonlinear effect of all calculated indicators on asset returns. The magnitude and manner of the independent variables' influence on asset returns varied at different levels, with noticeable distinctions in the effect before and after the threshold value of 1.0586. In light of these results, bank policymakers can strategically select an optimal liquidity level to enhance bank profitability based on asset returns. Manuscript profile -
Open Access Article
2 - Welfare costs of inflation using frictional unemployment in Iran:General Equilibrium Model approach
Hossein Nasrollahi Karim Emami kambiz Peykarjou Abbas Memarnejad Taghi TorabiThe objective of this paper is to examine the welfare cost of inflation in the context of Iran's economy, incorporating labor market frictions (search theory) within a monetary general equilibrium model. The model also features a cash-in-advance constraint. To achieve t MoreThe objective of this paper is to examine the welfare cost of inflation in the context of Iran's economy, incorporating labor market frictions (search theory) within a monetary general equilibrium model. The model also features a cash-in-advance constraint. To achieve this goal, through the utilization of calibration and sensitivity analysis in the steady state, the findings indicate that both employment and production are contingent on the elasticity of labor supply and the elasticity of vacancies in job matches. Depending on these two parameters, they may exhibit an increase in response to an escalation in the inflation rate. Additionally, the three-month optimal inflation rate in a stable state is determined to be 4.66%. The welfare gains, derived from reducing the three-month inflation rate from its current level of 5.3% to the optimal rate in a steady state, is calculated to be 0.0031% of total consumption. Therefore, based on the results, it is suggested that in inflation reduction policies, the effects of this reduction on welfare are taken into consideration, and special attention should be paid to the area of business investment by giving tax incentives, especially tax credits.. Manuscript profile -
Open Access Article
3 - The relationship between exchange rate overshooting and currency substitution in Iran’s economy
Seyed Mansour Heshmati Sanzighi Rahman Saadat Esmaeil AbounooriWhenever a country is domestic currency cannot fulfill its duties, foreign currency replaces it. Currency substitution is a common phenomenon in developing countries influenced by economic and political factors. One of the most significant economic aspects is exchange r MoreWhenever a country is domestic currency cannot fulfill its duties, foreign currency replaces it. Currency substitution is a common phenomenon in developing countries influenced by economic and political factors. One of the most significant economic aspects is exchange rate overshooting. The main objective of the current study is to investigate the relationship between exchange rate overshooting and currency substitution in Iran. Using Kamin-Ericsson (2003) method, we first examine the foreign currency in circulation and the volume of currency substitution in Iran’s economy using annual data from 1961-2021. Then, the self-explanatory Bayesian Vector Autoregression (BVAR) method is used to investigate the impact of exchange rate overshooting on currency substitution. According to the results, exchange rate overshooting and inflation always lead to increased currency substitution in Iran’s economy. On the other hand, economic growth has a negative effect on currency substitution. Additionally, neutralizing the impact of shocks related to exchange rate overshooting, economic development, and inflation requires more than five years; therefore, economic policymakers must consider the factor when managing currency substitution. Manuscript profile