Determinants of Inflation in Iran and Policies to Curb It
Determinants of Inflation in Iran and Policies to Curb It

Author: H. Elif Ture

Publisher: International Monetary Fund

Published: 2022-09-09

Total Pages: 35

ISBN-13:

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High and volatile inflation has been an endemic economic and social issue in Iran that has contributed to rising poverty and social tensions. For policymakers to effectively address the inflation problem, it is critical to understand its causes. This paper seeks to contribute to this endeavor by applying a vector error-correction model to study the short- and long-term determinants of inflation in Iran over the past two decades and identify policy options to curb it. Using quarterly data spanning 2004-2021, it finds that money growth drives inflation only in the long term, while currency depreciation, fiscal deficits, and sanctions (proxied by oil exports) drive inflation both in the short- and the long term. In the absence of a removal of US trade and financial sanctions that could significantly boost the rial, budget deficits will have to be adjusted to contain inflation, albeit gradually to avoid hindering the recovery. Over the medium term, strengthening the inflation targeting framework could help improve monetary transmission and contain inflation durably.

Islamic Republic of Iran
Islamic Republic of Iran

Author: International Monetary Fund. Middle East and Central Asia Dept.

Publisher: International Monetary Fund

Published: 2017-02-28

Total Pages: 48

ISBN-13: 1475583117

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Islamic Republic of Iran: Selected Issues

Islamic Republic of Iran
Islamic Republic of Iran

Author: International Monetary Fund

Publisher: International Monetary Fund

Published: 2002-09-27

Total Pages: 127

ISBN-13: 1451818963

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This Selected Issues paper for the Islamic Republic of Iran deals with the analytical considerations relating to the choice of the exchange regime. This issue came to prominence with the exchange rate unification of March 2002. The paper also examines the competitiveness of the non-oil economy, fiscal sustainability, and the labor market of Iran. The paper concludes that a degree of flexibility in the exchange rate is needed at this juncture, given Iran’s exposure to oil price shocks, and the desire of the authorities to promote the development of non-oil activities.

Determinants of Inflation in GCC
Determinants of Inflation in GCC

Author: Mrs.Hanan Morsy

Publisher: International Monetary Fund

Published: 2009-04-01

Total Pages: 34

ISBN-13: 1451872291

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Inflationary pressures have heightened in the oil-rich Gulf Cooperation Council (GCC) since 2003. This paper studies determinants of inflation in GCC, using an empirical model that includes domestic and external factors. Inflation in major trading partners appears to be the most relevant foreign factor. In addition, oil revenues have reinforced inflationary pressures through growth of credit and aggregate spending. In the short-run, binding capacity constraints also explain higher inflation given increased government spending. Nonetheless, by targeting supply-side bottlenecks, the increase in government spending is easing capacity constraints and will ultimately help to moderate price inflation.

Determinants of Inflation in the Islamic Republic of Iran-A Macroeconomic Analysis
Determinants of Inflation in the Islamic Republic of Iran-A Macroeconomic Analysis

Author: Olumuyiwa Adedeji

Publisher: INTERNATIONAL MONETARY FUND

Published: 2000-07-01

Total Pages: 28

ISBN-13: 9781451854978

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This study establishes a framework for analyzing the major determinants of inflation in the Islamic Republic of Iran. An empirical model was estimated by taking into consideration disequilibria in the markets for money, foreign exchange, and goods. Results strongly support the need for a sustained prudent monetary policy in order to reduce inflation and stabilize the foreign exchange market. The estimation shows that an excess money supply generates an increase in the rate of inflation that, in turn, intensifies asset substitution (from money to foreign exchange), thereby weakening real demand for money and exerting pressures on the foreign exchange market. The study also found that a permanent rise in real income tends to increase the real demand for money and reduces inflation in the long run.

Inflation and Conflict in Iraq
Inflation and Conflict in Iraq

Author: Udo Kock

Publisher: International Monetary Fund

Published: 2010-07-01

Total Pages: 26

ISBN-13: 1455201421

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Containing inflation has turned out to be one of the most challenging aspects of economic management in Iraq. This paper posits that conventional as well as unconventional factors explain inflation dynamics in the recent past. We build a theoretical model based on the insights into the workings of socialist economies under supply shortages provided by Shleifer and Vishny (1992) to help explain price dynamics. In the model, strategic behavior of the fuel distribution monopolist results in fuel shortages, with implications for fuel and non-fuel inflation. A number of step-wise adjustments of administered prices for fuel products since December 2005 offer an interesting experiment to help study this behavior. Our findings show that inflation may have been influenced by shortages in fuel and non-fuel commodity supplies, which themselves are driven by violence and rent-seeking.

Handbook of Research on Sociopolitical Factors Impacting Economic Growth in Islamic Nations
Handbook of Research on Sociopolitical Factors Impacting Economic Growth in Islamic Nations

Author: Ozdemir, Suleyman

Publisher: IGI Global

Published: 2017-07-12

Total Pages: 495

ISBN-13: 1522529403

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Over the years, the dissemination of technology across society has increased exponentially. As technology continues to improve worldwide connectivity, positive relations between countries is paramount to achieving cultural and economic progression. The Handbook of Research on Sociopolitical Factors Impacting Economic Growth in Islamic Nations is a pivotal scholarly resource on the current factors impacting international relations between Islamic countries. Featuring extensive coverage on sociopolitical structures, economic sector analysis, sociocultural properties, and political policies, this publication is ideal for academicians, students, and researchers interested in discovering more about the current trends and techniques in the economic infrastructures of Islamic nations.

The Main Determinants of Inflation in Nigeria
The Main Determinants of Inflation in Nigeria

Author: Mr.Gary G. Moser

Publisher: International Monetary Fund

Published: 1994-06-01

Total Pages: 25

ISBN-13: 145184980X

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This paper provides a selective review of the literature on the determinants of inflation in Nigeria, analyzes the dominant factors influencing inflation, presents the empirical results of a reduced-form elasticities model, and discusses the policy implications of the empirical results. The results of this analysis confirm the basic findings of earlier studies, namely that monetary expansion, driven mainly by expansionary fiscal policies, explains to a large degree the inflationary process in Nigeria. Other important factors are the devaluation of the naira and agroclimatic conditions. With respect to the depreciation of the naira, it was found that concurrent fiscal and monetary policies had a major influence on its impact on inflation. Given the considerable role of food commodities in the CPI, agroclimatic conditions (rainfall) were found to play a significant role in overall movements in prices and should be fully taken into consideration in any analysis of the inflationary process in Nigeria.