Document Type : Research Paper

Authors

1 student

2 Department of Theoretical Economics,Faculty of Economics , Allameh Tabatabai University

Abstract

The main purpose of this study is to analyze the nature of the money creation process by examining the approaches related to this process in Iran. The two main views regarding the money creation process are the endogenous and exogenous money approaches. The endogeneity of money means that the money supply is directly influenced by the economic activities and conditions in the economy, and it is not determined by central bank exclusively. The endogeneity of money can also be a very important factor in the efficiency and effectiveness of monetary policies on macroeconomic indicators. Therefore, in order to test the endogeneity based on post-Keynesian approaches, the two-stage method of the state-space approach was applied to determine a time-variable model of money supply using the annual data from 1357 to 1400 in Iran. The results indicate: firstly, money is endogenous. Secondly,the effect of explanatory variables on it is not constant over time, and therefore, it is necessary to change monetary policies from targeting on money aggregates according to the conditions of endogenous money.

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