Income on the Impact of Monetary Policy Channels on Economic Variables Based on the Systemic Dynamic Approach

Abstract

Monetary policy is a combination of the rules and actions that the central bank performs to achieve its goals. In many countries, the primary goal of monetary policy is price stability. However, some central banks also pursue other goals such as achieving full employment, maintaining domestic financial stability and instability in the balance of external payments. The purpose of this study is to investigate the effect of monetary policy channels on economic variables with the systemic dynamics approach, which using causal-loops, simply explained the relations between variables and showed that monetary policy, at least in short term the real variables influences the economy, so policy makers must carefully apply monetary policy to control the volume of money and production in the country.