Abstract:
Oil price fluctuations, as a key variable, have extensive effects on the economies of oil-exporting countries, including Iran. This study aims to analyze the effects of oil shocks on Iran’s macroeconomic variables by designing a New Keynesian Dynamic Stochastic General Equilibrium (DSGE) model in the context of an open economy tailored to the Iranian economic structure. It also evaluates the performance of different monetary policies in response to such shocks. The results show that a positive oil price shock initially leads to an increase in foreign exchange revenues, a decrease in the exchange rate, and a growth in imports, which temporarily reduce inflation and increase consumption of foreign goods. Over time, under a monetary base growth rate control policy, the rapid increase in liquidity stimulates inflation expectations and consequently leads to persistent inflation. In contrast, an interest rate control policy, by more effectively managing liquidity and inflation expectations, creates greater price stability and enables more sustainable production growth through interest rate reduction and facilitated lending. Overall, the findings suggest that an interest rate control policy is more efficient than a monetary base growth control policy in curbing inflation and enhancing long-term economic growth.