Impact of Monetary Policy on Value Added in Iran's Industrial Sub-Sectors (Positive Mathematical Programing Approach) with Emphasis on Basic Metals sub-sector

Document Type : Research Paper

Authors

1 Ph.D. Candidate in Economics, Qazvin Branch, Islamic Azad University, Qazvin, Iran

2 Assistant Professor of Economics, Qazvin Branch, Islamic Azad University, Qazvin, Iran

3 Assistant professor of Economics, Gazvin Azad University

4 Associate Professor of Economics, Kharazmi University, Tehran,Iran

Abstract

The main purpose of this paper is to investigate the effect of monetary policy on the value added in the basic metal Industries sector is based on the use of positive mathematical programming during the periode of 1990 - 2017. For achieving this, at first the long-run relationship between variables has been estimated by using of ARDL approach and then, the scenario designing and sensitivity analysis has been implemented through PMP model.The results of this study showed that the decreasing and incremental policies of monetary variables (liquidity and bank interest rate) in different scenarios have an effect on the added value of optimizing that subsection. Also, an important indicator of this method is to calculate the optimal value added of each sub-section in its base year and its targeting capability in some other scenarios. For example, in the first scenario, in the case of 5, 10, and 20 percent reduction in liquidity, value added will increase by 4, 9 and 18 percent in Basic Material Production industries. In this scenario, the drop in the policy variable will also increase the bank interest rate by as much as 3, 7 and 15 percent in the added value.

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References

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Quarterly Journal of Applied Theories of Economics
Volume 6, Issue 4 - Serial Number 23
February 2020
Pages 217-250

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