COMPARISON OF MONETARY POLICY IN THE ISLAMIC AND TRADITIONAL ECONOMY

This paper analyses the aggregate net income equation for the Islamic and the conventional economies derived from the sectorial balance sheets based on the flow of funds framework. For this purpose the economy was divided into four sectors such as households and enterprises, private banks, the central bank and the government. Comparison of the variables of the equation for the Islamic and the conventional economies related to sectors, financial and economic indicators provided an opportunity to discuss the differences and the common issues for monetary policy in the Islamic and the conventional economies returning us to the nature of monetary policy