Optimum Monetary Policy Under uncertainty about the relationship between Unemployment and Inflation in Iran

This paper is aimed at determining optimum monetary policy (MP) under uncertainty conditions. Existing obscurity about the relationship between inflation and unemployment may cause error for monetary policy. The findings of this paper show: first, the negative relationship between inflation and unemployment has not been confirmed. Second: based on Central Bank optimizing lose function, the travelled track of money volume is far from optimum trend, especially during the period of 1360-1385. Further, the main outcome shows that Central Bank should control inflation rate rather than unemployment. In fact monetary policy should concentrate on controlling inflation rate and ignore employment target.