Significance of financial accelerators in a New Keynesian model in Iranian economy

Experimental evidence related to 2008 financial crisis and its consequences indicated the importance role of the financial sector to transfer the shocks to the real sector of the economy. In the Iranian economy also, banking is one of the major financial sectors that affects and is influences by the overall performance of the national economy through resource mobilization, recruitment of liquidity, provision of payment tools, granting facilities, and creating interaction between investment and savings.
The analysis of the banks’ roles as financial accelerators over Iranian commercial eras may provide a better understanding of effectiveness of shocks on the economy. In this paper using a New Keynesian standard dynamic stochastic general equilibrium model regarding price-stickiness, and structural parameters of the model and some of the variables are calibrated and the impacts of different shocks on some macroeconomic factors are analyzed in the following two ways.
The first mode is a model that includes financial accelerators. The second is a model without a financial accelerator. Then the ability of each model in describing each key feature of data and the effects of momentums on key variables in Iranian economy are analyzed. All the data used in this paper refer to constant prices in 2011 and 1966-2016 period annually. Results of the estimates for the models indicate that the effect of money demand momentum on the investment variable, and also the effect of monetary policy momentum on consumption, investment and production variables in the model, taking into consideration the financial accelerators, are tenser than that of the model without financial accelerator.