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Abstract
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This study aimed to examine the effects of monetary policy on
macroeconomic variables with regard to the collateral constraint.
For this purpose, a dynamic stochastic general equilibrium
(DSGE) was developed for Iran’s economic status. Two scenarios
were considered as to account for the behavior of the central bank.
In the first scenario, the monetary rule is modeled according to the
GDP gap and inflation. In the second scenario that is modeled by
macro-prudential rule, in addition to the GDP gap and inflation, it
is also the central bank responses to the housing price gap that
contributes to a steady state. An examination of the impulse
response functions in the two scenarios indicated that the monetary
shock increased production and inflation. A monetary shock has a
positive impact on the consumption of patient households
(lenders) and a negative effect on impatient households’
(borrowers) consumption. The collateral constraint was assumed
to cause the effects of shocks to be continued on both groups. A
comparison between the two scenarios indicated that if the central
bank responds to the housing price deviation, in addition to the
GDP gap and inflation, the effectiveness of the monetary policy
will be strengthened.
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