The Effect of Monetary Policy Shocks on the Price Dynamics of Industrial Commodities Selected Group in Iran

Document Type : Research Paper


1 Department of Economics, Qazvin Branch, Islamic Azad University, Qazvin, Iran

2 Assistant professor of Economics, Gazvin Azad University


It is important to examine the dynamics of prices for industrial commodities in different periods of time, because fluctuations in commodity prices can be posed as a serious problem in policy making. The fluctuation in the price of industrial goods can also affect the production of various sectors of the economy. Therefore, the relationship between the factors affecting the price of industrial goods is very important. Monetary policy shocks are among the factors that can affect the price of industrial commodities. Therefore, identifying as accurately as possible the factors affecting price changes, as well as the exact trend of monetary policies and examining the impact shocks, can help policymakers in many sectors. The aim of this study is to investigate the effect of monetary policy shocks on the price dynamics of industrial commodities group in Iran using SVAR method during the time period of 2008-1 to 2017-4. The statistical population of the study is the macroeconomic sector of Iran and the commodities selected in this study include aluminum, copper, gold, rebar, beams and zinc. The results showed that in the long run, the greatest impact on the commodities by credits. Finally, it can be said that increasing the amount of credits paid to the industrial sector in order to provide the necessary capital to expand the production centers of industry and achieve a stable situation in the price of industrial goods are among the policies that can be effective to improve the situation


Main Subjects

  1. Abeygunawardana, K., Amarasekara, C., & Tilakaratne, C.D. (2017). Macroeconomic Effects of Monetary Policy Shocks: Evidence from Sri Lanka. South Asia Economic Journal. 18, (1), 21–38.
  2. Alam, R., & Gilbert, S. (2017). Monetary policy shocks and the dynamics of agricultural commodity prices: evidence from structural and factor-augmented VAR analyses. Agricultural Economics, 48, (2017), 15–27. DOI: 10.1111/agec.12291.
  3. Amatov, A., & Dorfman, J.H. (2017). The Effects on Commodity Prices of Extraordinary Monetary Policy. Journal of Agricultural and Applied Economics, 49. 1, 83–96.
  4. Asgharpir, H., Fallahi, F., & Talischi, E. (2012). The Asymmetric Effects of Monetary Shocks on the Price in Business Cycle of Iran Using Markov-Switching Approach. Journal of Economics and Modeling, Vol. 2, Issue7-8, 183-222. (In Persian).
  5. Augustine Kutu, A., & Ngalawa, H. (2016). Monetary Policy Shocks and Industrial Output in BRICS Countries. SPOUDAI Journal of Economics and Business, Vol. 66, Issue 3, 3-24.
  6. Azhdari, A., & Heydari, H. (2015). The Perspective of Industrial Growth in Iranian Economy, Office of Energy, Industry and Mine Studies, Assistance Infrastructure Research and Production Affairs, 14601, 1-22. (In Persian).
  7. Azhdari, A., Heydari, H., & Abdollahi, M. (2016). Investigating the Factors Affecting the Value Added of the Industry and Mining Sector in Iran Using the Johansson Cointegration Method, Parliament and strategy, 24, 89, 105-132. (In Persian).
  8. Baradaran, A., & Zommordiyan, Gh. (2017). The Effect of Monetary and Financial Policies on the Value Added of the Industry and Mine sector in Iran. Journal Management System, Vol.6, Issue 24, 117-138. (In Persian).
  9. Cabrales, C.A., Granados Castro, J.C., & Ojeda Joya, J. (2014), The Effect of Monetary Policy on Commodity Prices: Disentangling the Evidence for Individual Prices, Economics Research International, Vol. 20, 14, 6, 1-13.
  10. Choi, B. Y., & Pyun, J. H. (2018). Does real exchange rate depreciation increase productivity? Analysis using Korean firmā€level data. The World Economy, 41, 2, 604-633.
  11. Daee, B., & Afshoon, H. (2018). Investigating the Factors Affecting the Production of Industry Sector in Iran during 1396: 4-2011: 1 Approach Autoregressive Distributed Lag (ARDL), Economic Journal, 5, 6, 31-49. (In Persian).
  12. DaneshJafari, D., Sardarshahraki, A., Asnaashari, H., & Hatami, Y. (2013). The impact of exchange rate shocks on the challenges and prospects of employment in the industrial sector of Iran, The Macro and Strategic Policies, 1, 1, 93-104. (In Persian).
  13. Datta, B., (1952), The Economics of Industrialization, World Press,
  14. Hammoudeh, S., Nguyen, D.K., & Sousa, R.M. (2015), US monetary policy and sectoral commodity prices. J. Intl. Money Fin, 57, 3, 61–85.
  15. Hammoudeh, S., Nguyen, D.K., & Sousa, R.M. (2014), China’s Monetary Policy and Commodity Prices, IPAG Business School, Working Paper, 2014, 298, 1-33.
  16. Jafari Samimi, A., Tavakoliyan, H., & Hajikarami, M. (2017). Assessing monetary policy in shock situations Exchange rates: MDSGE approach. Quarterly Journal of Applied Economics Studies in Iran, Vol. 6. Issue 32, 1-34. (In Persian).
  17. Kaldor, N., (1966). Causes of the Slow Rate of Growth of the United Kingdom, Cambridge University Press.
  18. Kim, S. (1999), Do monetary shocks matter in theG-7 countries? Using common identifying assumptions about monetary policy across countries. J. Intl. Econ, 48, 2, 387–175.
  19. Mohebbi, S., Shahrestani, H., & Hojabrkiyani, K. (2017). Financial shocks and the role of monetary policy in the Iranian economy, assuming the existence of an interbank market in a DSGE model. Journal of Economic Research and Policies. Vol. 25, Issue 81, 123-153. (In Persian).
  20. Nagel, A., & Parker, J. (2003), Empirical macroeconomics: The effects of monetary policy. Gold-Hammer Collaborative Research at the Department of Economics, Reed College. [Accessed on 19 March 2015].
  21. Parvin, S., Bahrami, J., & Vahidi, S. (2012). Impact of financial shocks on production and price level in Iran using the model of structural vector regression itself. Quarterly Journal of Economical Modeling, Vol.6, Issue 4, 21-39. (In Persian).
  22. Salmani Bishak, M., Barghi Oskouee, M.M., & Lak, S. (2016). The Effects of Monetary and Fiscal Policy Shocks on Stock Market of Iran. Journal of Economic Modeling Research, Vol 6, Issue 22, 93-131. (In Persian).
  23. Taghizadeh, H., Zamanian, G., & Harati, J. (2018). Monetary Shocks Effects on Different Economic Sectors: Using the FAVAR Approach. Applied Theories of Economics, Vol 4, Issue 4, 1-26. (In Persian).
  24. Taghavi, M., & Lotfi, A. (2006). Investigating the effects of monetary policy on the volume of deposits, concessional facilities and liquidity of the banking system of the country (during 1374-1382). The Economic Research. Vol. 6, Issue 20, 131-165. (In Persian).