Document Type : Original Article
Authors
1 Ph. D. Student, Department of Economics, Faculty of Economics and Management, University of Semnan, semnan, Iran.
2 Department of Economics, Bu-Ali Sina University, Hamedan, Iran.
3 Department of Economics, Semnan University, Semnan, Iran
Abstract
The aim of this article is to examine consumer behavior regarding Giffen and Veblen goods in response to monetary shocks. Using the Dynamic Stochastic General Equilibrium (DSGE) model, the reactions of Iran's macroeconomic variables were analyzed based on seasonal data from the period 2001-2022. The results of this study showed that following a monetary base shock, inflation and labor demand increased, while the real interest rate decreased. Investment initially exhibited a positive short-term reaction but eventually declined. With the rise in household consumption expenditures, imports of consumer, capital, and intermediate goods also increased. The monetary base shock affected consumption more significantly than production and investment. Therefore, this shock had a positive impact on inflation and consumption, indicating consumer behavior that violates the law of demand but remains rational. As a result, it is recommended that policymakers focus on identifying Giffen and Veblen goods based on household income deciles, increasing production to meet societal needs, implementing stabilization policies particularly for Giffen goods, reducing the impact of the monetary base through oil revenues, and making appropriate investments in research and development.
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