Journal of Economic Modeling Research

---

The purpose of this paper is to investigate the source of fractional reserve banking and to review the literature on bank credit. Evaluating the operational procedure of this banking model demonstrates a new concept of credit money shaping aspect and its affect on the practical economy. The difference in due dates between depositing and receiving loan that causes Ex-nihio money to exist, the effect of this money on prices along with economic instability are among the issues that have occupied the critic scholar's minds in fractional reserve banking realm. In this paper, the effects of the fractional reserve banking model on the consumption behavior are analyzed. Also, the view points of the critics of this banking model are addressed. In this regard, an inter-generational consumption behavior model based on Maurice Allais's perspectives has developed. Results show that optimizing the existing model is the true test of the consumption instability in a permanent state in the fractional reserve banking realm. Also, according to the results there exits the possibility of instable capital repletion under certain circumstances.

---

One of the important targets of the economic planning is economic growth via enhancement of the labor productivity. In this regard, education expenditures play a crucial role. This study aims at investigating the effect of education expenditures on the level of human capital and economic growth through a computable general equilibrium approach. The data on economic variables and social accounting matrix belongs to the year 2001. Three scenarios on education expenditures are defined and their effect on human capital and economic growth are estimated. The results show that education expenditures have positive effects on economic growth and human capital. A 50% increase in education expenditures in the first period causes 3.81 and 5.8 percent increase in human capital and economic growth respectively. In the second period, the same increase in education expenditures affects human capital and economic growth positively by 5.4 and 7.3 percent respectively. Although separating the economic growth into human and physical factors in the first period shows that there is no relationship between human capital and economic growth, but in second period this separation causes a relationship between the two factors.

---

    This paper examines the effects of different variables on inflation in the monetary economics using endogenous growth models. So, different aspects of inflation formation were analyzed based on micro-foundations. We investigated the role of imported inflation, fiat money, expectations, monetary base and capital accumulation on inflation using an endogenous growth model. An ARDL approach was utilized to estimate the model for Iranian economy during 1979 -2008. The estimation results show that imported inflation affects the inflation through the exchange rate channel. Also, expectations, capital return and monetary base play an outstanding role in Iranian economy.

 

---

In this paper we analyzed the strategic interaction between government and central bank in Iranian economy. Using dynamic differential games and Nash equilibrium within cooperative and non-cooperative setting, we try to find the optimal values of debt, deficit and monetary base. The results of simulation show that in cooperative case the level of equilibrium debt is lower than the non-cooperative case and converge speed is higher in cooperative setting than non-cooperation setting. Also in cooperative case than non-cooperative case, less creation of money and less government deficit are needed for debt stabilization in long run. The results also show that in both cooperative and non-cooperative cases under uncertainty, more active policies are used to track debt to its equilibrium level. These active policies lead debt goes to smaller level.