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Paper Information

Journal:   JOURNAL OF APPLIED ECONOMICS STUDIES IN IRAN   SPRING 2016 , Volume 5 , Number 17 ; Page(s) 151 To 169.
 
Paper: 

PRICE-WAGE SPIRAL IN IRAN

 
 
Author(s):  NAZIRI MOHAMAD KAZEM, FARSHADI SAMIRA
 
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Abstract: 

This paper explores the interrelationship between price and nominal wage during the period of Fiscal Year 1997-78 to Fiscal Year 2012-13. An ARDL bound testing approach suggested by Pesaran et al. (2001) is employed to investigate the short-run dynamics and long-run relationship between consumer price index (CPI) and nominal wage rate, while accounting for the underlying macro determinants of price inflation, namely, the bilateral (Rial/US dollar) nominal exchange rate, credit (banks and financial institutions sectors) and real gross domestic product (GDP). The results show that the nominal exchange rate, the nominal wage rate and credit a positive relation with the price level both in the short-run and in the long run. And real GDP is negatively related to price. Granger causality test results also show that indirect causal relationship between nominal wage rate one-way price in the short term and the long-run. So there's wage price spiral be rejected. The results showed that long-term real GDP and exchange rates (balance of payments view) is the most important for the stability of the price level.

 
Keyword(s): WAGE, PRICE, BOUND TESTING
 
References: 
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