This paper tests whether positive and negative monetary shocks have symmetric effects on output growth. The new classical models imply symmetric effects. While new Keynesian models predict asymmetric effects. New Keynesians argue credit rationing and the downward inflexibility of wages and prices are the primary reasons for the asymmetric effects. This paper tests this proposition by utilizing three different methods, namely Two - Step OLS procedure used by Barro, Nonlinear Least Squares and SUR, for the Iranian economy during the period 1959 - 1990. The results support the hypothesis of asymmetric effects of monetary shocks. More specifically, positive shocks have no significant effects on output growth while negative shocks have a negative effect on output growth.