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Paper Information

Journal:   IRANIAN JOURNAL OF APPLIED ECONOMICS   summer 2017 , Volume 7 , Number 21 #r00448; Page(s) 19 To 32.
 
Paper: 

The Impact of Monetary Policy Instruments on Stagflation in Iran

 
 
Author(s):  AMIRI HOSSEIN*, Beyranvand Mahboubeh
 
* Faculty of Economics, .Kharazmi University, Tehran, Iran
 
Abstract: 
The statistical evidence related to inflation and output over the years 1976 to 2015 shows that Iran's economy has faced stagflation phenomenon in many years, including 1960s, 1970s, 1980s and the early 1990s. In the present paper, according to the importance of the monetary instruments’ effect on the indicators of output and inflation, the effect of monetary instruments on stagflation phenomenon is examined using the Autoregressive Distributed Lag method (ARDL) over the 1976-2015 period. The results show that in short-term and long-term, inflation has an inverse relationship with the economic growth rate and the excess reserves and has a positive relationship with the reserve rate, the interest rate, the growth rate of the monetary base and facilities. The economic growth rate also has an inverse relationship with the monetary base and inflation and with other variables such as the legal reserves, the additional reserves, the interest rate, the growth rate of facilities, the government expenditure, and the consumption has a direct relationship. On the other hand, among the all mentioned variables, only the monetary base simultaneously led to an increase in inflation and a decrease in the rate of economic growth and, consequently, to the stagflation occurrence.
 
Keyword(s): Stagflation,Monetary Policy Instruments,Autoregressive Distributed Lag Method
 
References: 
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