The Dynamic Regional Effects of Monetary Policy on Employment in Iran (TVP-FAVAR Approach)

Document Type : Research Paper


1 Faculty of Economics, University of Tehran

2 PhD Student in Economics, Arizona State University


The regions in a country respond differently to monetary shocks. The purpose of this paper is to analyze the effects of monetary shocks on employment in regions with non-systematic mechanism of monetary transmission. To achieve this purpose, we used TVP-FAVAR approach to describe monetary shocks in the thirty provinces over 1384:1- 1394:4. The results show that there are different responses to monetary shocks in Iranian provinces. Also, the response of each province is different in terms of time, and the economic conditions play main roles in response of province to monetary shocks. The findings of this paper represent evidences of asymmetric effects of monetary policies in Iranian regions. We suggest the central bank should consider the regional differences in policy making.


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