Payame Noor University Economic Growth and Development Research 2228-5954 11 42 2021 03 21 Exchange Rate Pass-Through and the Effects of Monetary Shock in a DSGE Model Exchange Rate Pass-Through and the Effects of Monetary Shock in a DSGE Model 154 131 6321 10.30473/egdr.2019.48777.5416 FA Niloofar Sadat Hosseini Ph.D. of Monetary Economics, Tabriz University, Tabriz, Iran Hossein Asgharpur Professor, Faculty of Economics and Management, Tabriz University, Tabriz, Iran Journal Article 2019 09 16 The purpose of this study is to study Taylor's theory and investigating the effect of monetary shocks on macroeconomic variables assuming the degree of exchange rate pass-through in different inflationary environments. In this study, the dynamic stochastic general equilibrium model for a small open economy has been used. In this framework, effects of monetary shock were investigated in Iran during 1988:1˗2014:4. and the inflation regimes and the degree of exchange rate pass-through have been investigated using a smooth transmission regression model. The empirical findings show that Taylor's hypothesis is confirmed. In other hands, the degree of exchange rate pass-through is high in an economy with high inflation. Due to a monetary shock, volatility of macroeconomic variables is high, assuming a high degree of exchange rate pass-through in the inflationary environments. The purpose of this study is to study Taylor's theory and investigating the effect of monetary shocks on macroeconomic variables assuming the degree of exchange rate pass-through in different inflationary environments. In this study, the dynamic stochastic general equilibrium model for a small open economy has been used. In this framework, effects of monetary shock were investigated in Iran during 1988:1˗2014:4. and the inflation regimes and the degree of exchange rate pass-through have been investigated using a smooth transmission regression model. The empirical findings show that Taylor's hypothesis is confirmed. In other hands, the degree of exchange rate pass-through is high in an economy with high inflation. Due to a monetary shock, volatility of macroeconomic variables is high, assuming a high degree of exchange rate pass-through in the inflationary environments. https://egdr.journals.pnu.ac.ir/article_6321_1181407972183faf70f146191ce6d6e6.pdf