Shahryar Zaroki; Sahar Nasrnejad Nesheli; Niloufar Gorgani Firoozjah
Abstract
In any society, the focus of statesmen, policymakers, and researchers on poverty reduction and enhancing economic welfare is necessary. Given that most government economic policies affect relative prices and their fluctuations, which in turn impact welfare, analyzing the welfare effects caused ...
Read More
In any society, the focus of statesmen, policymakers, and researchers on poverty reduction and enhancing economic welfare is necessary. Given that most government economic policies affect relative prices and their fluctuations, which in turn impact welfare, analyzing the welfare effects caused by price changes in different product groups seems necessary The aim of this study is to investigate the role of inflation of different commodity groups on Iran's economic welfare from 1972 to 2021. The research model is estimated using Autoregressive Distributed Lag (ARDL) approach. Economic welfare is measured using a composite index of well-being. The trend of the well-being index fluctuated during the study period reaching its peak in 1975 and its minimum in 1990. The long-term results of the estimation of the research model reveal several key findings:
First, total inflation and inflation of different groups of goods have an unfavorable effect on economic well-being.
Second, among different product groups, inflation in the housing, fuel, and lighting group has the most adverse effect on economic welfare.
Third, considering that the share and weight of the group of food, beverages and tobacco in the consumption basket of households is larger than other groups of goods, but the size of the effect of inflation of this group of goods on economic welfare is in the fourth place. Fourth, the increase in the inflation of the health and treatment group has the least adverse effect on economic welfare. Another finding is that per capita income and economic growth have a favorable effect on economic welfare. According to the obtained results, the government should take measures such as adopting appropriate measures in line with monetary discipline and preventing the irrational increase of monetary variables in accordance with inflation targeting to control inflation in order to improve welfare.
Introduction
The provision of economic welfare across different segments of society is a key concern for politicians in the country. Article 43 of the Constitution aims to ensure the independence of society, eradicate poverty and deprivation, and fulfill the basic needs of individuals as they progress, including housing, food, clothing, health, education, and the necessary facilities for family formation, along with providing working conditions and opportunities for full employment. To attain a comprehensive understanding of welfare and how to measure it, it is crucial to clarify the concept itself. Identifying the impact of various sectors such as housing, education, nutrition, health, and treatment on changes in welfare is essential. This allows for prioritizing efforts in each of these fields to enhance societal welfare, growth, and development. Monroe asserts that the primary objective of a society is to allocate resources among its members to maximize their welfare. Achieving this goal involves allocating resources in a manner that generates the highest overall income for society. In a free market economy, this allocation is typically accomplished through prices, which play a crucial role in determining changes in household welfare. Inflation and its fluctuations should be recognized as significant factors affecting welfare. Understanding the relationship between inflation and welfare enables policymakers to implement effective measures to mitigate its adverse effects and promote overall societal well-being.
Method
The Index of Economic Well-Being (IEWB) serves as a comprehensive and inclusive measure utilized in the current research to assess economic welfare. This index encompasses various dimensions that contribute to overall well-being, including:effective per capita consumption flow, net social accumulation of reserves and wealth-generating resources, economic inequality and economic insecurity. Each dimension is assigned weights in a specific manner, reflecting their relative importance. Consequently, the weights allocated to each dimension may vary across different observations. (Ozberg and Sharp, 2009). The general form of this index is as follows:
The value of the economic welfare index is measured by four components, which are consumption flow (CF), productive asset balance (WS), individual income distribution (ID), and economic security level (ES) (Bakhtiari et al., 2013). In this research, the base year of 2015 was used to validate the variables.
In the following, in order to investigate the effect of inflation of the total basket and different groups of goods on economic well-being, the autoregressive approach with distribution breaks (ARDL) has been used. First, the research model is specified with the aim of explaining the effect of inflation in the total basket of goods and services on economic welfare. Then, with the aim of analyzing the effect of inflation in different commodity groups, the research model will be presented. So in these two specifications of the IEWB research model, economic welfare is expressed as a dependent variable, which is calculated with the combined index of welfare. Inf inflation of the entire basket of goods and services, inflation for each of the 7 product groups [including 1. Health and treatment group (Health), 2. Clothing and footwear group (Cloth), 3. Furniture, accessories and Services used at home (Furniture), 4. Food, beverages and tobacco group (Food), 5. Recreation, education, hotel and restaurant group (ECERH), 6. Transportation and communication group (Transport) 7. Housing, fuel and lighting group, RGDPPC per capita real GDP, EG is economic growth.
Based on the above model, it is possible to test the effect of inflation in the mentioned 7 groups on the welfare of Iran's economy in the short ـ term and long ـ term situation.
Result and Discussion
In the material dimension of welfare, people should have a balanced life that includes employment and sufficient income to meet their basic needs. However, in many societies, includingIran, inflation and the instability of real purchasing power often pose challenges to people's ability to maintain material welfare. This can directly impact household consumption patterns and overall economic welfare. Therefore, understanding the effects of inflation on economic welfare is crucial. Considering the necessity of explaining the effect of inflation on economic welfare in Iran, in the present study, an attempt was made to analyze the effect of inflation of total goods and services and inflation of different groups of goods on economic welfare. For this purpose, while calculating the economic welfare with the composite index of welfare in the period of 1973 ـ 2022, the research model was estimated with the autoregression approach with distribution breaks. Our findings reveal a fluctuating trend in Iran's economic welfare during the study period. Following an initial increasing trend, economic welfare experienced a decreasing trend from 1976 until the end of the war. It increased again after the war, but decreased again in the post ـ war period.
The maximum value of the welfare index with the value of 69.6 belongs to the year 1354 and the lowest value of the welfare index with the value of 1.16 belongs to the year 1991. The results of the model estimation in 8 different estimations indicate the existence of a negative effect of inflation (total and basket of goods) on economic welfare. Based on this, the comparative results in the long term indicate that firstly, the inflation of all goods and services and the inflation of different commodity groups have an adverse effect on welfare. Second, among the 7 product groups, the inflation of the housing, fuel, and lighting group has had the most adverse effect on economic welfare. Also, due to the fact that the share and weight of the group of food, beverages, and tobacco in the consumption basket of households is larger than other groups, but the size of the inflation effect of this group of goods on welfare is in the fourth place. The increase in the inflation of the health and treatment group has the least adverse effect on economic welfare. Per capita income and economic growth also have a favorable effect on welfare, as expected.
Mahdi Yazdani; Raana Shokouei Donighi
Abstract
Macroeconomic instability is an important obstacle to the real growth of the economy and its sustainability. In this article, two methods have been used to investigate the impact of transparency on macroeconomic stability in emerging economies using simultaneous equations with panel data for the ...
Read More
Macroeconomic instability is an important obstacle to the real growth of the economy and its sustainability. In this article, two methods have been used to investigate the impact of transparency on macroeconomic stability in emerging economies using simultaneous equations with panel data for the period 1998-2014. In the first method, two equations for central bank transparency and stability have been considered and the mutual effect of these two variables has been investigated. In the second method, three equations for the variables of stability, including inflation, production gap and real exchange rate gap, and one equation to measure the effect of these variables on transparency are used simultaneously. The results of the study show that the transparency of the central bank is one of the factors affecting the stability of the macroeconomics. Also, the square of the central bank's transparency variable has a negative and significant relationship with macroeconomic stability. Meanwhile, the transparency of the central bank has an inverse relationship with inflation and the real exchange rate gap, and there is a two-way relationship between the transparency of the central bank and inflation. Finally, the effect of central bank transparency on production gap and vice versa is not significant.
soheila parvin; mahnoosh abdollah milani; Vahid Rezaei
Abstract
Supportive policies that lead to significant relative price changes have widespread impact on income distribution that cannot be considered by adjusting expenditures with the consumer price index. While households have different consumption patterns in different income deciles, the Consumer Price Index ...
Read More
Supportive policies that lead to significant relative price changes have widespread impact on income distribution that cannot be considered by adjusting expenditures with the consumer price index. While households have different consumption patterns in different income deciles, the Consumer Price Index (CPI) measures changes in prices based on the pattern of consumption in the average-income households. To overcome the issue, this paper examines the impact of relative price changes on distribution of real income (real expenditure) based on the HSPI Index, which is calculated using the weights of goods in each household’s basket. The period under study is 2007-2015. To measure inequality, the Gini coefficient is used based on Ogwang method. The results show that in periods that price of foods increase more than other categories, income inequality is the more when calculated, respectively, based on Household Specific Price Index (HSPI) and Consumer Price Index (CPI) than Gini coefficient based on nominal expenditures. Because of higher share of foods in consumption basket of low-income households, higher relative price of this category leads to worsening of income distribution and loss of welfare for low-income class.
Majid Babaie; Hossein Tavakolian; abbas shakeri
Abstract
First studies in inflation forecasting were mostly based on traditional Philips curve in which the relation between inflation and unemployment is studied. However, after several decades and especially after the Lucas criticism, Philips curve faced great takeovers. The new Philips curve ties real and ...
Read More
First studies in inflation forecasting were mostly based on traditional Philips curve in which the relation between inflation and unemployment is studied. However, after several decades and especially after the Lucas criticism, Philips curve faced great takeovers. The new Philips curve ties real and expected inflation, not to unemployment rate but to a scale of the marginal cost. Since in the original form of Philips curve, marginal cost stimulates inflation, it is difficult to formulate models that are effective in predicting inflation. Therefore, using TVP-DMA model, which has the ability to fix these deficiencies, we try to improve predictability of inflation in Iranian economy. An independent variable in conventional models can be either significant or insignificant while in TVP-DMA model, it may be significant during a period of time and insignificant in rest of the times. Therefore, this approach lets us to determine the periods in which an independent variable is significant and when it is not. In this study, we use seasonal data during the period 1991-2015. The results based on outputs of the TVP, DMS, and DMA models show that, out of 100 time periods under study, the liquidity growth rate in 19, economic growth rate in 7, unemployment in 8, exchange rate growth in 31, changes in the bank deposit rate in 14, oil revenues growth rate in 15, inflation uncertainty in 14 and the budget deficit growth rate in 4 periods have significant effect on inflation. Based on these results, it can be stated that exchange rate growth, liquidity growth and oil revenues growth rate are the most important indicators influencing inflation rate in Iran.
Ramin Khochiani; Younes Nademi
Abstract
The purpose of this paper is to revisit the relationship between inflation and output gap by using wavelet coherence approach. This approach attempts to combine the classical time series analysis with frequency domain analysis, and presents the advantages of assessing the co-movement of two series in ...
Read More
The purpose of this paper is to revisit the relationship between inflation and output gap by using wavelet coherence approach. This approach attempts to combine the classical time series analysis with frequency domain analysis, and presents the advantages of assessing the co-movement of two series in the context of both time and frequency dimentions. Using continuous wavelet transform approach, the relationship between inflation and output gap, by considering GDP with oil sector and without oil sector, was studied by annual and quarterly data from 1959 to 2016 in Iran. The results showed that in the long run, the relashionship between inflation and output gap is positive. This result confirms existence of a Phillips curve with negative slope in the long run. However, the relationship between the two variables in the short term and also for the period before Islamic Revolution reflects a Phillips curve with positive slope. Friedman noted this type of curve for high inflation economies for a period of several years in 1977 in his Nobel Prize lecture. This result could have been very important in testing Phillips curve theory in Iranian economy.
Mohammadgholi Yousefi; Bahman Khadam
Abstract
The purpose of this study is to find the main determinants of stagflation in Iranian manufacturing sector during 1982-2012. We have used the data of manufacturing industries, categorizing them into three groups of resource base, low technology and medium and high technological industries. We have used ...
Read More
The purpose of this study is to find the main determinants of stagflation in Iranian manufacturing sector during 1982-2012. We have used the data of manufacturing industries, categorizing them into three groups of resource base, low technology and medium and high technological industries. We have used logit regression with fixed effect, taking industries utilizing less than 50 percent of their nominal capacity and having more than 20 percent disguised unemployment in addition with having capital–output ratio of over 3o percent as industries suffering from stagflation. If a manufacturing industry was suffering stagflation, its dependent variable was given a value of 1 and the dependent variable of other industries was set to zero. Our explanatory variables include the imports of intermediate goods, wage costs, labor productivity, interest rates, exchange rate and oil revenue. Our findings show that all the variables with the exception of labor productivity had expected signs and their coefficients were statistically significant. The results show that, while as expected, the coefficient of labor productivity was negative, however, the coefficients of other variables were positive and significant implying positive impact on stagflation.
Morteza Khorsandi; Nastaran Alibabaie
Abstract
Since the unemployment and inflation are two target variables of economic policies and in many cases policy-makers have to sacrifice one for another, the question arises that what is the preferences of society between these two targets. The appropriate answer can be obtained when the effect of each variable ...
Read More
Since the unemployment and inflation are two target variables of economic policies and in many cases policy-makers have to sacrifice one for another, the question arises that what is the preferences of society between these two targets. The appropriate answer can be obtained when the effect of each variable on welfare is estimated and compared with each other. Therefore, in this paper, the effect of unemployment and inflation on happiness as an index of welfare is estimated. This estimation is done with two panel data samples. The first sample consist of 146 countries that happiness index is calculated for them and the second sample only includes Iran and its neighbors. The results show that in both cases unemployment has more effect on reducing happiness. In the sample of Iran and its neighboring countries, the absolute value of unemployment coefficient is 2.4 times higher than that of inflation. Accordingly, it can be concluded that in construction of social loss functions and also misery indices the weight of unemployment must be greater than inflation and the proposed relative weight for Iran is 2.4.
Mostafa Sharif; Seyed Mohammadreza Javan
Abstract
Many studies have been done about inflation in all developed and developing countries and they have tried to analyze and assess the factors affecting inflation. However, few studies have been done on the causality of inflation. In this study, we have tried to use time series methods to identify different ...
Read More
Many studies have been done about inflation in all developed and developing countries and they have tried to analyze and assess the factors affecting inflation. However, few studies have been done on the causality of inflation. In this study, we have tried to use time series methods to identify different variables that have the greatest impact on inflation in Iran. The purpose of this paper is to find causal relationships between the imports of consumption, intermediate and capital goods in one hand and inflation on the other hand during the period 1980-2010 in Iranian economy. In this study, we have tried to identify different variables that their time series have the greatest impact on inflation in Iran, Therefore, in this study we have considered the different variables of the consumer price index (inflation rate), liquidity, per capita GNP, free market exchange rate, the adjusted ratio of budget deficit to GDP (BD, GDP), as well as imports of capital, consumption and intermediate goods. In this study, VAR model, error correction model and Granger causality test are used and the resultd confirm one-way and two-way relationship between inflation and and different types of imports.
Mohsen Khezri; Bahram Sahabi; Kazem Yavari; Hassan Heydari
Volume 15, Issue 57 , July 2015, , Pages 193-228
Abstract
Given the importance of inflation in Iran economy, scrutiny of inflation determinants is important .according to various studies, evaluation of determinants of inflation using standard VAR model, may lead to wrong conclusions and this is due to omitted variables bias in VAR model. For example, the problem ...
Read More
Given the importance of inflation in Iran economy, scrutiny of inflation determinants is important .according to various studies, evaluation of determinants of inflation using standard VAR model, may lead to wrong conclusions and this is due to omitted variables bias in VAR model. For example, the problem of price puzzle in the empirical literature is one of these results. In this study, for a more accurate assessment of determinants of inflation in Iranian economy and forecasting inflation, instead of using FAVAR model with constant coefficients, we have employed TVP-FAVAR models and inflation has been modeled. In this model, the variables of GDP growth, growth of the monetary base, inflation, exchange rates and interest rates are considered as the main variables, and to estimate the non-observable variables of speculation section return, variables in the overall classification are modeled. Based on the results, the relationship between the variables change over time and conditions prevailing in the economy is effective on the influence of model variables on each other.
Hossein Abbasinejad; Yazdan Gudarzi Farahani
Volume 14, Issue 52 , April 2014, , Pages 26-1
Abstract
Abstract The study of the effect of memory in different economic indices, especially inflation and money market, has high research attractiveness. In this paper, by using the data of consumer price index for Iran during 1990/04 – 2011/11, we investigate the characteristics of CPI’s long–run ...
Read More
Abstract The study of the effect of memory in different economic indices, especially inflation and money market, has high research attractiveness. In this paper, by using the data of consumer price index for Iran during 1990/04 – 2011/11, we investigate the characteristics of CPI’s long–run memory and regress its ARFIMA model. In addition, the amount of error terms in ARFIMA model are examined by FIGARCH model in order to determine what model the heteroscedasticity in inflation is following. The results indicate that monthly time series of inflation may have non-integer root. In other words, the degree of integration for inflation can be a non-integer number rather than an integer. To determine this, an Augmented Dikey-Fuller test, Philips–Prone test and KPSS are used and the results show that the degree of integration for inflation series should lie between zero and one. Thus, the hypothesis of inflation series with memory is proposed. By estimating the parameter of long run memory in the model it becomes evident that the inflation series has the degree of integration of 0.46 and one time differentiating leads to over-differentiation. Hence, inflation series has a long run memory in Iran and the effects of each shock on this variable exists for long periods.
Reza Akbarian; Mohamad Karkon
Volume 13, Issue 48 , April 2013, , Pages 79-107
Abstract
Based on the debates on the impacts of globalization on government size, efficiency hypothesis and compensation hypothesis are two measure of globalization. The compensation hypothesis predicts that governments perform a risk-mitigating role against internationally generated risk and economic dislocations. ...
Read More
Based on the debates on the impacts of globalization on government size, efficiency hypothesis and compensation hypothesis are two measure of globalization. The compensation hypothesis predicts that governments perform a risk-mitigating role against internationally generated risk and economic dislocations. Under efficiency hypothesis, governments compete to attract capital, and this competition will result in decreasing government presence in economy. In this paper we try to investigate the reason of government enlargement in Iran. We use trade openness (as globalization index), real income per capita, inflation, population, oil income and government size (based on government expenditure) and consumption expenditure in the form of percentage of GDP. An Autoregressive Distributed Lags (ARDL) model) is developed for this study based on Bounds Testing (Pesaran, et.al, 2001). The result of this model shows that in the long run trade openness has no effect on government size but there is a significant relation between them in short run. Furthermore, the relation between globalization and social welfare and security shows that these expenditures didn’t compensate the effect of shock resulted from trade openness. In this way, the oil income has created a great income reserves for government which make government enlarge more.
Hossein Tavakolian; Asghar Shahmoradi
Volume 12, Issue 47 , January 2013, , Pages 51-70
Abstract
In the mainstream economic view, in low levels of inflation there is a positive relationship between inflation and economic growth, and this relationship changes to a negative one at high levels of inflation. This study examines the probability of occurring these two regimes, using Markov Switching Approach ...
Read More
In the mainstream economic view, in low levels of inflation there is a positive relationship between inflation and economic growth, and this relationship changes to a negative one at high levels of inflation. This study examines the probability of occurring these two regimes, using Markov Switching Approach (MSA). The results show that there has been a positive relationship between inflation and economic growth only in 3 periods (1989-93 and two other short periods, 2002-03 and 2006), while in most of the time, inflation in Iran negatively affected the economic growth. The average duration of high inflation periods has been about 4 years, while the average duration of low inflation periods has been about 2 years.
Akbar Komeyjani; Mohammad Hadi Sobhaniani; Saeid Bayat
Volume 12, Issue 45 , July 2012, , Pages 201-226
Abstract
Because of much dependence to oil revenues, Oil price fluctuations have much affect on Iranian economy. Since government possess a great deal of oil revenues and those financial government expenditure, then identifying manner and stringency of affecting shocks arise from oil revenue growth on inflation ...
Read More
Because of much dependence to oil revenues, Oil price fluctuations have much affect on Iranian economy. Since government possess a great deal of oil revenues and those financial government expenditure, then identifying manner and stringency of affecting shocks arise from oil revenue growth on inflation is very important. Subject of this paper is “Asymmetric effects of oil revenue growth on inflation in Iranian economy applying VECM method”. Our results indicate that both positive and negative shocks arise from oil revenue growth are inflationary.
Ebrahim Eltejaei; Khadijeh Riahi
Volume 12, Issue 44 , April 2012, , Pages 1-24
Abstract
This paper investigates some determinants of disinflation costs (sacrifice ratio) in some developing countries. The ratio is calculated by a SVAR model using annual data during 1985-2008 for 40 developing countries. The results show the ratio is decreasing in the status of high levels of initial inflation ...
Read More
This paper investigates some determinants of disinflation costs (sacrifice ratio) in some developing countries. The ratio is calculated by a SVAR model using annual data during 1985-2008 for 40 developing countries. The results show the ratio is decreasing in the status of high levels of initial inflation and central bank independence. Also, the openness of economy and capital mobility has positive effects on the ratio.
Reza i Moosavi Mohsen; Haideh Norouzi
Volume 11, Issue 42 , October 2011, , Pages 39-64
Abstract
This paper investigates the inflation tax. Laffer Curve surfaces of inflation tax have
been estimated in Iran, using time series data for the period 1961-2006. Considering the high
inflation ratio of iran during the last three decades, it is hypothesized that iran operates in
fourth region of the ...
Read More
This paper investigates the inflation tax. Laffer Curve surfaces of inflation tax have
been estimated in Iran, using time series data for the period 1961-2006. Considering the high
inflation ratio of iran during the last three decades, it is hypothesized that iran operates in
fourth region of the Laffer curve surface. In this research, Cagan!s money demand function
is used. Also, we consider an explicit role for the reserve ratio and it introduced inflation and
required reserve ratio as locus of instruments which maximize the inflation tax. Results of
this survey show that Iran operates in right side of the Laffer curve surfaces (region I) and
inflation tax maximize at the highest inflation rate.
Akbar Komijani; Ramin Mojab
Volume 11, Issue 41 , July 2011, , Pages 13-30
Abstract
Uncertainty results from economic and noneconomic government policies. Thispaper tries to identify the benefits or the costs of these uncertainties by analyzingthe relationship between Inflation uncertainty and Investment in Iran in quarterlyperiod of 1368:1-1387:2 (1989:1-2008:2). The results ...
Read More
Uncertainty results from economic and noneconomic government policies. Thispaper tries to identify the benefits or the costs of these uncertainties by analyzingthe relationship between Inflation uncertainty and Investment in Iran in quarterlyperiod of 1368:1-1387:2 (1989:1-2008:2). The results confirm a negativerelationship between inflation uncertainty and investment.
reza tehani; Shapur Mohammadi; Arash Mohamadalizadeh
Volume 11, Issue 41 , July 2011, , Pages 225-244
Abstract
This paper presents a new perspective on the Fisher hypothesis, which states a positiverelationship between nominal stock returns and inflation. The new approach is based on a waveletmultiscaling method that decomposes a given time series on a scale-by-scale basis. The time series of inflation and stock ...
Read More
This paper presents a new perspective on the Fisher hypothesis, which states a positiverelationship between nominal stock returns and inflation. The new approach is based on a waveletmultiscaling method that decomposes a given time series on a scale-by-scale basis. The time series of inflation and stock return are decomposed into three wavelet details and one wavelet smooth. Empirical results show that there is a positive relationship between stock returns and inflation at 2month period and at 8-month period, while a negative relationship is shown 4-month period. Also,no significant relationship was revealed in one month time horizon. This indicates that the nominal return results are supportive of the Fisher hypothesis for risky Assets in d2 and s3 of the wavelet domain, while the stock returns do not play a role as an inflation hedge at one month and four month timescales.
Javid Bahrami; Maryam Farshchi
Volume 10, Issue 37 , July 2010, , Pages 115-138
Abstract
This paper presents a test of the P* model using Iran quarterly data over the period 1988-2005. The basic formulation of the P* model, which is derived from the quantity theory of money, is manipulated to obtain an equation for the price gap and level of output and velocity gaps. So the P-Star model ...
Read More
This paper presents a test of the P* model using Iran quarterly data over the period 1988-2005. The basic formulation of the P* model, which is derived from the quantity theory of money, is manipulated to obtain an equation for the price gap and level of output and velocity gaps. So the P-Star model implies that inflation is determined by the level of output gap and velocity gap. On the other hand real money gap can either be used instead of price gap, as the other approach. Estimation of the dynamic relation between the inflation rate and price gap are significant and price gap’s share is about 50 percent in inflation process.
Nasser Khiabani; Jamshid Pajuyan; Akbar Komeyjani
Volume 10, Issue 36 , April 2010, , Pages 87-113
Abstract
This paper is based on a cointegrated I(2) and I(1) variables models money, price, output, real effective exchange rate and interest rates in Iran over period 1990 quarter 1-2006 quarter 4. The empirical findings demonstrated long-run homogeneity between price and money was broken down and the hypothesis ...
Read More
This paper is based on a cointegrated I(2) and I(1) variables models money, price, output, real effective exchange rate and interest rates in Iran over period 1990 quarter 1-2006 quarter 4. The empirical findings demonstrated long-run homogeneity between price and money was broken down and the hypothesis of the stable money demand relationship was not confirmed in the period, instead of this we found a relation which determines inflation based on liquidity ratio and real effective exchange rate. Money supply growth significantly explains output growth in the period. In addition, the paper provides further insights about the effects of financial repression on output and determining the behavior of opportunity cost of money in Iran.
Teymour Mohammadi; Reza Teleblou
Volume 10, Issue 36 , April 2010, , Pages 137-170
Abstract
In this paper, we study inflation dynamics and then examine the relation of inflation and inflation uncertainty. At first, for filtering of predictable term of inflation series, we used time series model. In this way, some test like ADF, PP, KPSS were also used.
The results show that integration ...
Read More
In this paper, we study inflation dynamics and then examine the relation of inflation and inflation uncertainty. At first, for filtering of predictable term of inflation series, we used time series model. In this way, some test like ADF, PP, KPSS were also used.
The results show that integration of inflation series is neither one nor zero. Then we examine the hypothesis of fractional integration that means long memory of inflation. With applying ARFIMA model, we show that inflation has fractional integration with degree of 0.4 that is implying that Iran’s inflation has long memory and then every shock to this variable remain long run.
In the next stage, we used ARFIMA residual for test GARCH model then that was used as inflation uncertainty. With granger causality test we find that the causality between inflation and uncertainty is bilateral.
Ali Esmaieel Zadeh Magharri
Volume 9, Issue 33 , July 2009, , Pages 97-123
Abstract
The aim of this paper is to investigate the relationship between investment, import and export on inflation in Iran’s economy. First, we talk about inflation theory and then give a short discussion about inflation effects on investment to make sure that our time series are stationary. We use ADF ...
Read More
The aim of this paper is to investigate the relationship between investment, import and export on inflation in Iran’s economy. First, we talk about inflation theory and then give a short discussion about inflation effects on investment to make sure that our time series are stationary. We use ADF method.
Then we estimate our models. We find out that the relationship between export and import and inflation is positive and the relation between investment and inflation is negative.
Alimorad Sharifi; Mahdi Sadeghi Shahdani; Abedin Ghasemi
Volume 8, Issue 31 , January 2009, , Pages 91-119
Abstract
The allocation of subsidies payment has been mentioned in both articles 46 and 47 of the Third Socio-Economic, and Cultural Development Plan. The global oil price fluctuations and their direct impacts on the Iranian national budget allocations has resulted in energy subsidies payment to be one of the ...
Read More
The allocation of subsidies payment has been mentioned in both articles 46 and 47 of the Third Socio-Economic, and Cultural Development Plan. The global oil price fluctuations and their direct impacts on the Iranian national budget allocations has resulted in energy subsidies payment to be one of the most challenging issues in the Iran’s economy. The objective of this research is the assessment of inflationary impacts of energy subsidy removal by using an energy input-output price model. The findings indicate that the costs of production in the different economic sectors will rise following energy prices increase. The inflationary impacts in non-metallic mineral products, forestry, and petroleum products will be the highest while the electricity price increase has dominant role in price inflation. The significant changes will happen in the macroeconomic variables such as private consumption expenditures, government consumption expenditures, gross fixed capital formation, as well as exports.
Teymoor Mohammadi; Amir Gholami
Volume 8, Issue 29 , July 2008, , Pages 49-74
Abstract
The purpose of this article is to examine the effects of exchange rate unification on macroeconomic variables (inflation, unemployment and output) by applying a Vector Autoregression model to Iran’s economy. Variables are GDP, Price level, Unemployment and exchange rate and data belongs to the ...
Read More
The purpose of this article is to examine the effects of exchange rate unification on macroeconomic variables (inflation, unemployment and output) by applying a Vector Autoregression model to Iran’s economy. Variables are GDP, Price level, Unemployment and exchange rate and data belongs to the priod 1961-2001.
We can Summerize the results of this research as follows:
1) Official exchange rate is significantly correlated with consumer price index, so that exchange rate shocks resulting from Unification positively affects price level within three periods.
2) Official exchange rate is not significantly correlated with the real GDP.
3) Official exchange rate is not significantly correlated with the unemployment rate.
Gholamreza Eslami Bidgoli; Saeed Bajalan
Volume 8, Issue 29 , July 2008, , Pages 205-225
Abstract
Inflation and its causes are one of the main issues in economics. One of the theories that try to interpret this phenomenon is Quantity Theory of Money. According to this theory, there is pure linear relationship between the amount of liquidity and general level of prices. This article tests the accuracy ...
Read More
Inflation and its causes are one of the main issues in economics. One of the theories that try to interpret this phenomenon is Quantity Theory of Money. According to this theory, there is pure linear relationship between the amount of liquidity and general level of prices. This article tests the accuracy of this theory in Iran. In addition, the government of Iran has taken the policy of price stabilizing for several years. This article also investigates the effect of this policy on inflation rate. The results show that although the relationship between liquidity and inflation in Iran is not linear, changes in liquidity have a direct effect on inflation. In addition, results indicate that there is statistically significant positive relationship between inflation uncertainty and inflation rate. So government could control inflation uncertainty through this policy, which in turn lead to decrease in inflation rate.
Parviz Davodi; Ali Asghar Salem
Volume 6, Issue 23 , January 2007, , Pages 15-48
Abstract
In order to investigate the contribution of gasoline price change on Iran's economy, in this study, by using panel data and estimating an Almost Ideal Demand System (AIDS) model for the period of 1996 -2003, we've tried to calculate changes on household's welfare in different income levels, which are ...
Read More
In order to investigate the contribution of gasoline price change on Iran's economy, in this study, by using panel data and estimating an Almost Ideal Demand System (AIDS) model for the period of 1996 -2003, we've tried to calculate changes on household's welfare in different income levels, which are arisen from a 30 percent increase in gasoline price. Equivalent Variation (EV) and Compensative Variation (CV) are two applied criteria for this purpose. In addition to direct effects, it has been tried to calculate the indirect contribution of this change on household's welfare. The results indicate that the relative loss of welfare is more for the lower income levels than for the higher.
