Substitution of traditional money with virtual currencies and its effects on macroeconomic variables in the form of DSGE model

The purpose of this article was to investigate the replacement of traditional money with virtual currencies and its effects on macroeconomic variables with the approach of Dynamic Stochastic General Equilibrium (DSGE) models. For this purpose, the data of the period 2018-2019 with seasonal frequency have been used. In the model designed in this article, it is assumed that due to the use of virtual money, a substitution between virtual money and traditional money will happen in people's asset portfolio. In this study, the shock caused by the price and volume of Bitcoin transactions is considered as an indicator for the demand for virtual currency. The results show that the shock from virtual currencies has led to a decrease in the demand for traditional money, in other words, there has been a substitution between holding traditional money and virtual money. In addition, the results indicated that due to the shock of virtual currencies, the amount of consumption in the economy has increased, and on the other hand, the amount of government income from royalties and money printing has decreased. Also, the results showed that the government's tax revenues have also decreased due to the trend of financial resources in the economy towards the demand of virtual currencies.