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:: Volume 20, Issue 62 (summer 2012) ::
3 2012, 20(62): 117-142 Back to browse issues page
An Investigation into the Impacts of Internal and External Shocks on Inflation in Iran
Farhad Ghafari , Hamed Naemy Pajoh
Islamic Azad University , farhad.ghaffari@yahoo.com
Abstract:   (5444 Views)
This article investigates the impacts of internal and external shocks on inflation in Iran by using Vector Auto regression (VAR) model. The data have been captured during (1973-2007).The results of VAR model indicate a negative relationship between inflation and increase of output, on the one hand, and positive relationship between inflation and other variables (foreign currency growth rate, liquidity increase and growth in CPI and imported services prices), on the other hand. The results of VAR model also show that the negative impact of output on inflation in second lag exceeds the positive impact of money supply on inflation in second lag. The Impulse –responses functions (IRF) approve the above, too. Besides, the variance decomposition indicates that in the short run, the contribution of exchange rate on inflation is more than other variables, while in the long run, growth of output and increase in liquidity make the biggest contribution in the explanation of inflation. In sum, output and liquidity have persistent impact on inflation in Iran.
Keywords: Inflation, Vector Auto Regression, Iran
Full-Text [PDF 834 kb]   (1897 Downloads)    
Type of Study: Research | Subject: Special
Received: 2012/11/11
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Ghafari F, Naemy Pajoh H. An Investigation into the Impacts of Internal and External Shocks on Inflation in Iran. 3. 2012; 20 (62) :117-142
URL: http://qjerp.ir/article-1-391-en.html


Volume 20, Issue 62 (summer 2012) Back to browse issues page
فصلنامه پژوهشها و سیاستهای اقتصادی Journal of Economic Research and Policies
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