The Effect of Economic Crisis of West on Asset Prices and Monetary Transmission Mechanism of Iran

Abstract Whether financial crisis is nature of capitalism or result of political blunders, in recent two decades has affected not only source countries, but also all the countries directly and indirectly. In present research, the emphasis has been put on the effect of economic crisis of America on monetary transmission mechanism from tract of asset prices. In this paper, through auto regressive structure vector of 10 variables for 1988-2010, the monetary transmission mechanism of country in periods before crisis and after crisis and its transmission to the country have been studied. Obtained results of auto regressive structure vector for the period before existence of financial crisis and its transmission to country shows that global financial crisis has failed structure in monetary transmission mechanism of country. Results show that before a crisis provoked, the index of housing price has played the most part in explaining the fluctuations of gross domestic production and after that the rate of exchange, the price of golden coin and index of price of stock market have played the most important role in in explaining the fluctuations of gross domestic production

Keywords: Financial Crisis, Monetary Transmission Mechanism, Assets Prices