Shahid Beheshti University Journal of Economics and Modelling 2476-5775 10 1 2019 05 22 Analysis of the role of Unconventional Monetary Policy Using the Financial Conditions Index: The B-VAR Approach Analysis of the role of Unconventional Monetary Policy Using the Financial Conditions Index: The B-VAR Approach 211 240 87141 10.29252/ecoj.10.1.211 FA Hadiseh Mohseni PhD Candidate in Economics, Faculty of Management an Economics, University of Sistan and Baluchestan, Iran Mosayeb Pahlavani Associate Professor of Economics, Faculty of Management an Economics,University of Sistan and Baluchestan ,Iran (Corresponding Author) Mohammad Nabi Shahiki Tash Associate Professor of Economics, Faculty of Management an Economics,University of Sistan and Baluchestan, Iran Hosein Mirjalili Associate Professor of Economics, Institute of Humanities and Cultural Studies Journal Article 2018 12 06 The central banks typically respond to inflationary fluctuations and production gaps by using monetary policy tools. The financial crisis in 2007 indicated that the monetary policy of central banks and pricing tools used to stabilize the economy have not been effective. Thus central banks utilized unconventional monetary policy to achieve financial stability the index of financial conditions indicates the financial climate affecting firms and households. This paper aims to identify and analyze the channel of monetary policy transmission and estimate the effect of the index of financial conditions on Iran's economic activity during the 2005-2017 period. Then, using the forward and backward distribution in the Bayesian VAR model, the impulse variables and immediate response to the financial condition indicator in the period under review are estimated. The findings of the paper indicate that financial conditions have negatively affected GDP and private sector investment, and credit growth has played a significant role in the financial condition index. The central banks typically respond to inflationary fluctuations and production gaps by using monetary policy tools. The financial crisis in 2007 indicated that the monetary policy of central banks and pricing tools used to stabilize the economy have not been effective. Thus central banks utilized unconventional monetary policy to achieve financial stability the index of financial conditions indicates the financial climate affecting firms and households. This paper aims to identify and analyze the channel of monetary policy transmission and estimate the effect of the index of financial conditions on Iran's economic activity during the 2005-2017 period. Then, using the forward and backward distribution in the Bayesian VAR model, the impulse variables and immediate response to the financial condition indicator in the period under review are estimated. The findings of the paper indicate that financial conditions have negatively affected GDP and private sector investment, and credit growth has played a significant role in the financial condition index. https://ecoj.sbu.ac.ir/article_87141_1daac734b5c2cb7cbb9182906e3155db.pdf