A Study on Nonlinear Relationship between Inflation and Economic Growth in Iran A Markov Switching Approach

Tavakolian, Hossein; Shahmoradi, Asghar

Document Type : Research Paper

Authors

¹ PhD Student in Economics, Faculty of Economics, University of Tehran

² Assistant Professor, Faculty of Economics, University of Tehran

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 (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.

Keywords

References

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Economics Research

A Study on Nonlinear Relationship between Inflation and Economic Growth in Iran A Markov Switching Approach

References

References

Volume 12, Issue 47 - Serial Number 4
January 2013
Pages 51-70

A Study on Nonlinear Relationship between Inflation and Economic Growth in Iran A Markov Switching Approach

References

References

Volume 12, Issue 47 - Serial Number 4January 2013Pages 51-70

Volume 12, Issue 47 - Serial Number 4
January 2013
Pages 51-70