AN EMPIRICAL ANALYSIS OF THE MONETARY AUTHORITIES' ABILITY TO CONTROL THE STOCK OF MONEY IN IRAN

In discussions about the efficacy of monetary policy instruments, attention is often focused on analysing the money supply process. Monetarists, in general, argue that the monetary authorities can exercise effective control over the stock of money; others, especially those who share the new view of monetary theory argue that the determination of the stock of money is part of the economy. In this view, the stock of money is the outgrowth of the behavior of the public, the financial sector (banks), the finance ministry, and the rest of the world as well as of the actions of the central bank. Understanding this complex of interrelationships, and the central bank's place in it, is facilitated by the money multiplier concept. This empirical analysis in Iranian data helps identify the role of each sector in the money -supply process and its relationship with the other factors operating in that process