Money and Inflation in the Islamic Republic of Iran

Abstract

This paper looks at the determinants of inflation in Iran. Unlike the traditional estimates of the demand function for real money balances, the approach followed here focuses on the relationship between nominal variables and inflation. The model estimates are used to address the questions raised by the decline in inflation that occurred up to the first half of 2006, looking at the structural stability of the estimated relationships and the ability of the model to predict inflation at the end of the sample. The estimates confirm the strong relationship between money and inflation when M1 is used, with no evidence of a structural change.Money;Economic models;inflation, money growth, price level, monetary policy, central bank, money supply, monetary fund, real money, money balances, inflation equation, money demand, money market, real output, monetary targets, nominal variables, inflationary impact, inflation target, monetary factors, monetary programs, nominal rate of return, macroeconomic analysis, monetary growth, monetary expansion, monetary control, inflation dynamics, high inflation, monetary shocks, inflation performance, inflation process, price inflation, monetary impact

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Research Papers in Economics

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Last time updated on 10/24/2014

This paper was published in Research Papers in Economics.

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