Hossein Tavakolian,
Volume 12, Issue 43 (3-2021)
Abstract
After the imposed war, Iran's economy has seen two relatively successful experiences in controlling inflation. These two periods include the final years of the Third Development Program and the Joint Comprehensive Plan of Action (JCPOA) term. This is while we are seeing a relatively high inflation rate in other periods. In this paper, based on literature on monetary rules and using a Time-Varying Parameter Bayesian Structural Vector Auo Regressive (TVP-BSVAR) Model with stochastic volatilities, we study a rule-based monetary policy or a systematic monetary policy and a non-systematic monetary policy (based on the stochastic volatilities of monetary shocks). The results indicate that in addition to the systematic monetary policy obtained from the model, the success of monetary policymakers in controlling inflation is not only due to inflation control per se (thst is systematictic) but also for non-systematic reasons such as fiscal policy through fiscal discipline and oil revenue management by both monetary and fiscal policymakers that does not fit into the framework of systematic monetary policy.
