The effect of monetary policy on GDP using money supply is the main goal of this thesis. The effect of monetary policy on GDP is considered in two different shocks, positive and negative, applying yearly data (1973 – 2000) for the Iranian economy. A method of autoregressive distributive lag (ARDL) is used. The endogenous money supply is used in a system of two equations to analyze the effects of shocks. The positive effect of shocks is observed. The result shows that the central bank is able to affect the GDP growth controlling the money supply.
