Document Type : Research Paper


1 Department of Business Management, Tonekabon Branch, Islamic Azad University, Iran

2 Department of Management, Aliabad katoul branch, Islamic Azad University, Iran


This paper attempts to solve a benchmark money in utility model by first order Taylor approximation to the policy function. After a brief summary of recent development in first order Taylor approximation in solving dynamic stochastic general equilibrium models, we choose Sidrauski’s Money in utility model as a standard model and follow the approach proposed by Uhlig [1] to solve for the recursive law of motion at first order.


Main Subjects

[1]   Uhlig, H. (1995). A toolkit for analyzing nonlinear dynamic stochastic models easily.
[2]   Blanchard, O. J., & Kahn, C. M. (1980). The solution of linear difference models under rational expectations. Econometrica: Journal of the Econometric Society, 1305-1311.
[3]   Walsh, C. E. (2003). Labor market search and monetary shocks. Elements of Dynamic Macroeconomic Analysis, 451-486.
[4]   Ruge-Murcia, F. J. (2007). Methods to estimate dynamic stochastic general equilibrium models. Journal of Economic Dynamics and Control, 31(8), 2599-2636.
[5]   TAEI, H. (2007). An Estimation of Labour Supply Function Using the Iranian Micro Data.
[6]   Hartley, J. E., Hoover, K. D., & Salyer, K. D. (Eds.). (1998). Real business cycles: A reader. Psychology Press.
[7]   Turnovsky, S. J. (1996). Applications of continuous-time stochastic methods to models of endogenous economic growth. Annual reviews in control, 20, 155-166.
[8]   Fakhrhosseini, S.F. (2013). Evaluation of Effects of Monetary Policy on Iranian Economy In a Monetary Business Cycle Framework. Journal of Monetary And Banking Researches, 6(14),111-132.
[9]   Davoudi, P., Zarepour, Z.(2007). The Role of Definition of Money in the Stability of the Iranian Demand for Money. Iranian economic research, 29, 47-74.
[10]        Sidrauski, M. (1967). Rational choice and patterns of growth in a monetary economy. The American Economic Review, 57(2), 534-544.
[11]        Kavand , H. and Shahmoradi, A.(2009). The Effect of Oil Price Changes on the Technological Fluctuations in an Oil Exporting Country: A DSGE. ISF 2009 conference, Hong Kong, June 21-24.
[12]        Khaliliaraghi, M., Shakouri ganjavi, H., & Zanganeh, M. (2009). Optimal Monetary Policy for the Iranian Economy: An Application of Optimal Control Theory. Journal of Economic Research (Tahghighat-E-Eghtesadi) (JTE), Volume 44, Issue 3, Winter 2010.
[13]          Shahmordi , A. and Ebrahimi, F.(2010). The Impacts of Monetary Policies in Iran: A  DSGE Approach. Journal of Monetary And Banking Researches, 2(3), 31-56.
[14]        Amini, A., Neshat, H. (2005). Estimating the Time series of Capital stock In the economy of Iran During the period of 1338-1381.(in Persian) The Journal of Planning and Budgeting, 10(1), 53-86.