چکیده:
The study of determining the factors affecting inflation or consumer price index has been conducted by many macroeconomic economists nationally as well as internationally. In this paper, we assess the external determinants of inflation dynamics in Iran. For this purpose, we use an OLS single equation model and a vector error correction model (VECM). Results of the analysis reveal that money supply, exchange rate, import price index and intensification of sanctions are contributed in raising general price index in the long run. Long-run elasticity of inflation with respect to money supply, exchange rate, effective tariff and import price index are 0.25, 0.118, 0.087 and 0.71. Moreover, in every year that the severity of sanctions has increased, inflation increases with amount of 0.084 (or 8.4%).Results of OLS single equation model show that only 21% of the domestic inflation variance in short run is explained by the independent variables. Iran's inflation is driven mostly by exchange rate (with one season lag) and effective tariff (with two seasons lag).
In the short run, the coefficient of error correction term is -0.13 suggesting 13 percent annual adjustment towards long run equilibrium. General Price index of last year and unit price of imported goods of two years before are found to be positively related with general price index.
خلاصه ماشینی:
This paper assesses the external determinants of inflation dynamics in Iran using an OLS single equation model and a vector error correction model.
The issue of Iranian inflation dynamics is also present in various studies; Masoodi and Tashkini (2005) in order to study the long-run relationship between inflation and its determinants for periods from 1959 to 2002 used Vector Auto Regressive method with spread lags.
Results showed that production, import price index, liquidity and exchange rate are the variables affecting inflation in the Iranian economy.
Based on the values of coefficients, it can be said that long-run elasticity of inflation with respect to money supply, exchange rate, effective tariff and import price index are 0.
Conclusions This paper carries out long run as well as short run estimates of external factors influencing general price index (inflation) in Iran.
Results of the analysis reveal that money supply, exchange rate, import price index and intensification of sanctions are contributed in raising general price index in the long run.
Results of the analysis reveal that money supply, exchange rate, import price index and intensification of sanctions are contributed in raising general price index in the long run.
Long-run elasticity of inflation with respect to money supply, exchange rate, effective tariff and import price index are 0.
Long-run elasticity of inflation with respect to money supply, exchange rate, effective tariff and import price index are 0.
Results of OLS single equation model show that only 21% of the domestic inflation variance in short run is explained by independent variables.