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Analyzing the Liquidity Growth and its Effect on Inflation in Iranian Economy: A Case Study for the Period 1350-1385
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Yousef Mehnatfar *   , Touranj Dehghani |
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Abstract: (21449 Views) |
| The aim of this paper is to investigate the liquidity growth and its effect on inflation in Iranian economy during the period of 1350-1385. After reviewing the literature on this topic, the time-series data from the Central Bank, Organization for Management and Planning and the IMF are used and based on the method of Ordinary Least Squares (OLS), the econometric model is estimated. Among the main explanatory variables, which affect the general level of prices one may refer to the gross national product (GNP), foreign exchange rate, the volume of money supply, commodity exports and income received from petroleum exports. The results from the estimation of the model show that these variables are significant and influential on the increase in the level of inflation in Iranian economy. It follows therefore that the Government should adopt contractionary monetary policies towards preventing the increase in inflation within the objectives of the 4th Development Plan and the Iranian 20-year vision. |
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| Keywords: Inflation, Liquidity, Quantity Theory of Money, Contractionary Monetary Policies, OLS Estimator |
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Type of Study: Research |
Subject:
General
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