This repository is dedicated to the exploration and analysis of Iran's money supply mechanism through a dynamic model developed in Vensim. This project delves into the intricate relationships among GDP, inflation, liquidity, and the banking system, with a special focus on understanding how government policies, banking practices, and external economic factors influence the national economy.
The primary aim is to simulate the complex economic environment of Iran to forecast the outcomes of various monetary and fiscal policies. By examining the feedback loops and dependencies within the economic system, this model serves as a tool for policymakers, economists, and researchers interested in the implications of economic decisions.
- To Analyze Economic Dynamics: Understand the critical components and drivers of money supply within Iran's economy, including the effects of oil revenues, government spending, and international economic relations.
- Policy Simulation: Utilize dynamic modeling to simulate the impact of different policy decisions on inflation, GDP growth, and liquidity. This includes scenarios such as adjustments in government budgeting, banking system reforms, and fiscal policy changes.
- Sustainable Economic Policies: Offer insights into the design and implementation of economic policies that promote stability, growth, and a balanced approach to inflation and liquidity management.
The model highlights several key insights into the functioning of Iran's economy:
- Dutch Disease and Liquidity Swells: The model provides evidence of how heavy reliance on oil revenues can lead to inflationary pressures and liquidity swells, impacting overall economic stability.
- Banking System Dynamics: Analysis of the banking sector reveals how current practices influence liquidity creation, suggesting paths for reform that could mitigate inflationary pressures while supporting economic growth.
- Policy Impact Analysis: Simulations demonstrate the potential outcomes of various policy measures, offering a nuanced understanding of their implications for economic stability and growth.
The dynamic model was constructed using Vensim, a powerful tool for system dynamics and simulation. It incorporates various economic indicators and factors, such as:
- GDP growth rates
- Inflation rates
- Government spending and revenues
- Banking sector operations and policies
By simulating different scenarios, the model tests hypotheses about the relationships between these factors and their cumulative effect on money supply and economic health.
This project's findings contribute significantly to the discussion on monetary policy and economic planning in Iran, providing a detailed examination of the factors driving inflation and liquidity. The dynamic modeling approach offers valuable insights for policymakers, highlighting the potential effects of various interventions on economic stability.