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Monetary Policy In Iran: The Challenge Of Reducing Inflation, Leo Bonato, Abdelali Jbili

Leo Bonato

The conduct of monetary policy in an oil economy with a managed floating exchange rate regime can be challenging in an environment of fiscal dominance and incomplete transition to a market economy. The Five-Year Development Plans provide a natural benchmark against which to assess monetary policy performance in Iran. Price stability has proved elusive, with liquidity growth targets constantly exceeded by a large margin. The paper examines the reasons behind these results and, based on the lessons that can be drawn from the literature and the international experience, makes some proposals on how to improve on this record. Although fiscal …