Asymmetric Effects of Monetary Shocks on Real Output in Iran: A Markov-Switching Approach

An important issue in macroeconomics is the effect of monetary shocks on macroeconomic variables. How monetary shocks affect the real production in different economic situations such as recession and expansion is vital for policy makings and the effectiveness of the policies. So, this research tries to test and analyze the asymmetric impacts of monetary shocks on the productions in Iran by using seasonal Time Series Data during 1999-2008 and Markov-Switching model. The results indicate that negative and positive monetary policies in recession and also expansion period have asymmetric effects on domestic production growth. In general, monetary shocks are more effective in recession than expansion.