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An Examination of the Relationship between Food Prices and Government Monetary Policies in Iran

By Naser Shahnoushi, Shida Rastegari Henneberry and Hooman Manssori

Abstract

This study examines the relationship between food prices and monetary policy variables, using a Vector Error Correction Model (VECM) approach applied to annual data from 1976 to 2006. Results indicate that food prices in Iran have a long-run and short-run equilibrium granger causality relationship with money supply. More specifically, monetary policy reforms are shown to have a significant impact on food prices and domestic agricultural production. These policies influence consumption patterns and have serious implications for poverty reduction, food security issues, and agricultural growth in Iran.VEC model, food Prices, monetary policy, Iran, Agricultural and Food Policy,

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