The Impact of Electronic Payment Instrument on Real Sector of Iran's Economy: A DSGE Approach

Document Type : Original Article


1 Ph.D. Candidate in Economics, Faculty of Economics and Political Science, Shahid Beheshti University, Tehran, Iran

2 Professor of Economics, Faculty of Economics and Political Science, Shahid Beheshti University, Tehran, Iran

3 Assistant Professor of Economics, Faculty of Economics and Political Science, Shahid Beheshti University, Tehran, Iran



Considering the importance of electronic payment tools in financial transactions and the increasing development of these tools, this study aims to examine the effects of electronic payment tools using the new Keynesian DSGE model, from the household consumption channel, the demand for monetary assets of households and bank deposit to the real sector of Iran's economy. So far, the impact of these tools on the real sector of Iran's economy has not been investigated using Micro-based models. The basic elements of the considered model are households, companies (both final and intermediate goods companies), commercial banks, government and central bank. The parameters of the model were determined using the calibration method of the period of 2016-2018. The results of the shock of electronic payment tools on the variables of production, employment, inflation, growth rate of money and investment were investigated, and the results indicate that with the shock of electronic payment tools, production, employment and investment increased and inflation and the growth rate of the money decreases. The impact of electronic payment tools in the real sector of Iran's economy show that these tools can play a role beyond the safe transfer of money and policymaking, infrastructure growth and development use of new technologies and legislation in This section appears is necessary more and more.


Main Subjects

- Alzoubi, T. (2018). Determinants of bank profitability: Islamic versus conventional banks. Banks & bank systems, (13, Iss. 3), 106-113.
- Awad, I.M., & Karaki, M.S. (2019). The impact of bank lending on Palestine economic growth: An econometric analysis of time series data. Financial Innovation, 5(14).
- Basel Committee on Banking Supervision (BCBS). by European Central Bank (ECB), 43, 68 ... Asian crisis (1997–1998) and 191. on business cycle, 175.
- Bech, M.L., & Garratt, R. (2017). Central bank cryptocurrencies. BIS Quarterly Review September. BIS Quarterly Review September 2017, Available at SSRN:
- Ben, F., Miguel, M. & Gerald, S. (2014). Electronic Money and Payments: Recent Developments and Issues. Bank of Canada: Ottawa, ON, Canada, 2014.
- Berensten, A. (2012). Monetary Policy Implications of Digital Money. Munich Personal RePEc Archive (March 2012), 1.
- Berentsen, A. (1998). Monetary policy implications of digital money. Kyklos, 51(1), 89-118.
- Bernanke, B.S. & Blinder, A.S. (1988). Is it Money or Credit, or Both, or Neither? Credit, Money and Aggregate Demand. The American Economic Review, 78(2), 435-439.
- BIS, CPSS, (March 2003). A glossary of terms used in payments and settlement systems.
- Dargahi, H. & Hadian, M. (2016). Evaluating the interaction of real and financial sectors in Iran's economy: DSGE approach. Economics and Modelling, 26(7), 1-32 (In Persian).
- Davidson, P., & Weintraub, S. (1973). Money as cause and effect. The Economic Journal, 83(332), 1117-1132.
- Erfani, A, Nowrozi, Z. (2014). Electronic money and its effect on the central bank's role in monetary policy management. Economics and Modelling, 5(17-18), 93-109 (In Persian).
- Erosa, V. E. (2018). Online Money Flows: Exploring the Nature of the Relation of Technology’s New Creature to Money Supply—A Suggested Conceptual Framework and Research Propositions. American Journal of Industrial and Business Management, 8(02), 250.
- Farzin Vash, A. & Rahmani, T. (2001) The internalization of money supply and the effect of cost pressures on it in Iran's economy. Journal of Economic Research, 56, 111-83 (In Persian).
- Friedman, B.M. (2010). Reconstructing economics in light of the 2007–? financial crisis. The Journal of Economic Education, 41(4), 391-397.
- Friedman, B.M. (2010). Decoupling at the Margin: The threat to monetary policy from the electronic revolution in banking. International Finance, 3, 261–272
- Friedman, B.M. (1999). The Future of Monetary Policy: The Central Bank as an Army with only a Signal Corps. International Finance, 2(3), 321-338.
- Goodhart, C.A.E. (2000). Can central banking survive the IT revolution? (pp. 1-34). London School of Economics, Financial Markets Group.
- Goodhart, C., & Krueger, M. (2001). The impact of technology on cash usage.
- Hasan, I., Renzis, T. D., & Schmiedel, H. (2012). Retail Payments and Economic Growth. Bank of Finland Research Discussion Paper, 2.
- Heryadi, H., Azwardi, A., Sukanto, S. (2020). The causality among e-money, manufacturing, services and money supply: An empirical evidence of ASEAN countries. J. Perspekt. Pembiayaan Dan Pembang. Drh. 8, 269–276.
- Hosseini, Sh. (2018). Ten points about blockchain and cryptocurrencies. specialized conference on block chain and cryptocurrencies: Applications and Regulation. National Defense University and Higher Research Institute and Strategic Research Group of Defense Resources and Economy.
- Humphrey, D.B, Willesson, M., Bergendahl, G. & Lindblom, T. (2006). Benefits from a Changing Payment Technology in European Banking. Journal of Banking & Finance, 30(6), 1631-1652.
- Irelad, P.N. (2001). Money Role in the Monetary Business Cycle. National Bureau of Economic Research, Working Paper, 8115.
- Kaldor, N. (1957). A model of economic growth. The economic journal, 67(268), 591-624.
- Kearney A.T., & Schneider F. (2011). The shadow economy in Europe. Retrieved from pdf/cd3277da-74c3-4a35-9ac4-97f7a0e93518
- Kearney A.T., & Schneider F. (2013). The shadow economy in Europe, 2013. Retrieved from
- Keynes, J.M. (1936). The General Theory of Employment, Interest, and Money. London: Macmillan.
- Kuryzman, J. (1993). The Death of Money. Simon & Schuster.
- Luo, S., Zhou, G., & Zhou, J. (2021). The impact of electronic money on monetary policy: Based on DSGE model simulations. Mathematics, 9(20), 2614.
- Mahatir, M.R., Aimon, H., & Sentosa, S.U. (2020). Stability of Money Supply, E-money, Interest Rate, and Inflation in Indonesia. In Proceedings of the Fifth Padang International Conference on Economics Education, Economics, Business and Management, Accounting and Entrepreneurship (PICEEBA-5 2020), Padang, Indonesia, 18–19 July 2020; Atlantis Press: Paris, France, 2020; pp. 92–100.
- Maurer, R. (2008). The Increasing Leverage of Central Bank Cash in Transition to a Cashless Economy–A DSGEM Analysis. Available at SSRN 1137150.‏.
- Mehedi Nizam, A. (2021). Impact of E-Money on Money Supply: Estimation and Policy Implication for Bangladesh. Available online: (accessed on 2 September 2021).
- Merrouche, O., & Nier, E. (2012). Payment systems, inside money and financial intermediation. Journal of Financial Intermediation21(3), 359-382.‏
- Minsky, H.P. (1991). The endogeneity of money. In Nicholas Kaldor and mainstream economics (pp. 207-220). Palgrave Macmillan, London.
- Mlambo, C., & Msosa, S. K. (2020). The effect of financial technology on money demand: evidence from selected African states. International Journal of Economics and Business Administration, VIII(1), 366-373.
- Moore, B.J. (1979). The endogenous money stock. Journal of Post Keynesian Economics, 2(1), 49-70.
- Moore, B.J. (1983). Unpacking the post Keynesian black box: bank lending and the money supply. Journal of Post Keynesian Economics, 5(4), 537-556.
- Mustapha, S.A. (2018). E-Payment Technology Effect on Bank Performance in Emerging Economies- Evidence from Nigeria. Journal of Open Innovation: Technology, Market and Complexity, 4(43), 1-14.
- Palley, T.I. (1987). Bank lending, discount window borrowing, and the endogenous money supply: A theoretical framework. Journal of Post Keynesian Economics, 10(2), 282-303.
- Patrick HT. (1966). Financial Development and Economic Growth in Underdeveloped Countries. Economic Development and Cultural Change, 14 (2), 174-189.
- Rangeley, M. (2018) Blockchain: The New Intellectual Battleground Within Economics. In Banking and Monetary Policy from the Perspective of Austrian Economics, 259-280.
- Rangeley, M. (2018) The future of money in the information age. Ordo, 68, 293–302.
- Slozko, O., & Pelo, A. (2014). The electronic payments as a major factor for futher economic development. Economics & Sociology, 7(3), 130.
- Wasiaturrahma, W., & Kurniasari, A. L. (2021). ELECTRONIC PAYMENT AND ECONOMIC GROWTH IN INDONESIA. JDE (Journal of Developing Economies), 6(2), 287-308.
- Wong, T.L., Lau, W.Y., & Yip, T.M. (2020). Cashless Payments and Economic Growth: Evidence from Selected OECD Countries. Journal of Central Banking Theory and Practice, 9(s1), 189-213.
- Woodford, M. (1998). Doing it Without Money: Controlling Inflation in a Post-Monetary World. Review of Economic Dynamics, 1(1), 173-219.
- Woodford, M. (2006). How Important is Money in the Conduct of Monetary Policy?, NBER Working Paper,
- Zavarian Kechu Moghali, M., Hejbar Kiani, K. & Mimar Nejad, A. (2020) Effect of electronic payment tools on money demand in developing countries (case study of Iran). Financial Economics, 14(50), 191-212 (In Persian).