Economic Strategy

Economic Strategy

Examining Inflation in the Iranian Economy with Emphasis on the Impact of Economic and Political Institutions

Document Type : Original Article

Authors
morteza abdollahi 1
parviz DAVOODI 2
hosein samsami 3
1 Phd student in Economics and Lecturer in the Faculty of Economics and Political Sciences of Shahid Beheshti University, Tehran, Iran.
2 Professor of Economics, Faculty of Economics and Polotocal Sciences of shahid Beheshti University, Tehran, Iran.
3 Assistant professor, Faculty of Economics and Polotocal Sciences of shahid Beheshti University, Tehran, Iran
10.22034/es.2024.469305.1789
Abstract
High inflation rates at the macroeconomic level create uncertainty, which reduces investment, slows economic growth, and increases the income and wealth distribution gap among different income deciles in society. This concern has made preventing continuous price increases and maintaining macroeconomic stability a primary demand of economic agents. Considering the importance of controlling inflation to enhance economic predictability, this study aims to analyze the factors contributing to inflation by identifying the key players involved. To examine this issue, the current study evaluates the impact of factors on the implicit price index of Gross Domestic Product (GDP) in Iran from 1973 to 2021 using the Autoregressive Distributed Lag (ARDL) method. The findings indicate that, in both the short and long terms, the monopoly index, state ownership, energy prices, liquidity, trade-weighted exchange rate, government size, and global inflation index all have a positive and significant relationship with the implicit price index. Additionally, inventory levels and labor productivity are negatively related to the implicit price index in both the short and long terms. Regarding the relative influence of liquidity versus the exchange rate on inflation, the results show that initially, the growth rate of the trade-weighted exchange rate has a more significant impact on the implicit price index. However, over time, the effect of the liquidity growth rate on the implicit price index becomes more pronounced. Therefore, it is expected that, alongside managing exchange rates and liquidity, efforts should also focus on enhancing economic competition and regulating state ownership to control inflation.
Keywords
PGDP deflator
monopoly
government size
liquidity
exchange rate
autoregressive distributional lag (ARDL)

Subjects

ایزدخواستی، حجت؛ نگین تاجی، زریر و نجفی، محمدمهدی (1401). بررسی عوامل اثرگذار بر تورم با تأکید بر اقتصاد دانش‌بنیان در کشورهای صادرکننده نفت. اقتصاد باثبات، 3(3)، 50-71.
پورکاظمی، محمد؛ حسین، بیرانوند و امین، دلفان (2016). تعیین عوامل تأثیرگذار بر تورم و طراحی سیستم هشدار‌دهنده تورم شدید برای اقتصاد ایران. فصلنامه پژوهش‌ها و سیاست‌های اقتصادی، 23(76)، 145-166.
جعفری صمیمی، احمد؛ طهرانچیان، امیرمنصور؛ ابراهیمی، ایلناز و بالونژادنوری، روزبه (1393). اثر تکانه‌های پولی و غیرپولی بر تولید و تورم در یک الگوی تعادل عمومی پویای تصادفی در شرایط اقتصاد باز: مطالعه موردی اقتصاد ایران. مطالعات اقتصادی کاربردی ایران (مطالعات اقتصادی کاربردی)، 3(10)، 1-32.
دژپسند، فرهاد و سالاری شهری، محمد (1403). عوامل مؤثر بر تورم در سه برنامه توسعه دوره چشم‌انداز. پژوهش‌های برنامه و توسعه، 5(2)، 97-131.
سبحانی، حسن؛ ابوحمزه، داریوش و زمانی، رضا (1398). تحلیل پایداری تورم از منظر اقتصاد سیاسی ایران. دوفصلنامه جستارهای اقتصادی ایران با رویکرد اقتصاد اسلامی، 16(31)، 41-69.
شاکری بستان‌آباد، رضا؛ رسولی بیرامی، زهرا؛ صالحی کمرودی، محسن و پاکروح، پریسا (1399). تأثیر انتظارات، مازاد نقدینگی و طرف تقاضا بر پویایی تورم در ایران: رهیافت منحنی فیلیپس هایبریدی نئوکینزی. نشریه اقتصاد و بانکداری اسلامی، ۹(۳۱)، 147-۱۷۱.
عظیمی، میری‌طامه؛ تقی‌زاده، اشرف‌‌سادات و صمدی، رضا (1392). بررسی روند و علل تورم در ایران در سال‌های (1391-1389) و اقدامات صورت‌گرفته برای مهار آن. فصلنامه سیاست‌های مالی و اقتصادی، 1(1)، 25-58.
عماد‌زاده، ‌مصطفی؛ صمدی، ‌سعید و حافظی، ‌بهار (2005). بررسی عوامل (پولی و غیرپولی) مؤثر بر تورم در ایران 1382-1338. پژوهش‌نامه علوم انسانی و اجتماعی، 19(5)، 33-52.
نوفرستی، محمد (1387). بررسی اثر افزایش قیمت حامل‌های انرژی بر درآمدهای مالیاتی و مخارج جاری. فصلنامه مالیات، سال شانزدهم، (2).
 
Acemoglu, D.; Johnson, S.; Robinson, J. & Thaicharoen, Y. (2003). Institutional causes, macroeconomic symptoms: volatility, crises and growth. Journal of monetary economics, 50(1), 49-123.
Adebiyi, M. & Mordi, C. N. (2012). A Dynamic Stochastic General Equilibrium (DSGE) Model of Exchange Rate Pass-Through to Domestic Inflation in Nigeria.
Aisen, A. & Veiga, F. J. (2006). Does political instability lead to higher inflation? A panel data analysis. Journal of money, Credit and Banking, 1379-1389.
Aisen, A. & Veiga, F. J. (2006). Does political instability lead to higher inflation? A panel data analysis. Journal of money, Credit and Banking, 1379-1389.
Banda, H. N. (2009). Inflation and Its Causes and Effects. Economic Review, (5).
Blackburn, K.; Bose, N. & Capasso, S. (2012). Tax evasion, the underground economy and financial development. Journal of Economic Behavior & Organization, 83(2), 243-253.
Blakeley, G. (2019). Stolen: How to save the world from financialisation. Repeater.
Bulut, A. (2023). Informal Economy and Financial Development: The Role of Institutions. Sosyoekonomi, 31(55), 195-209.
Cukierman, Alex, Sebastian Edwards & Guido Tabellini (1992). Seignioriage and Political Instability. American Economic Review, 82(3), 537–55.
Durguti, E.; Tmava, Q.; Demiri-Kunoviku, F. & Krasniqi, E. (2021). Panel estimating effects of macroeconomic determinants on inflation: Evidence of Western Balkan. Cogent Economics & Finance, 9(1), 1942601.
Durlauf, S. (2005). Institutions as a Fundamental Cause of Long-run Growth. Handbook of Economic Growth, 1.
Elbahnasawy, N. G. & Ellis, M. A. (2022). Inflation and the structure of economic and political systems. Structural Change and Economic Dynamics, (60), 59-74.
Elbahnasawy, N. G.; Ellis, M. A. & Adom, A. D. (2016). Political instability and the informal economy. World Development, (85), 31-42.
Ghanayem, A.; Downing, G. & Sawalha, M. (2023). The impact of political instability on inflation volatility: The case of the Middle East and North Africa region. Cogent Economics & Finance, 11(1), 2213016.
Grindle, M. (2012). Good governance: The inflation of an idea. Planning ideas that matter, 259-282.
Han, S. & Mulligan, C. B. (2008). Inflation and the Size of Government. Review-Federal Reserve Bank of Saint Louis, 90(3), 245.
Inim, V.; Samuel, U. E. & Prince, A. I. (2020). Other determinants of inflation in Nigeria. European Journal of Sustainable Development, 9(2), 338-338.
Kaltenthaler, K. C. & Anderson, C. J. (2000). The changing political economy of inflation. Journal of Public Policy, 20(2), 109-131.
Lim, Y. C. & Sek, S. K. (2015). An examination on the determinants of inflation. Journal of Economics, Business and Management, 3(7), 678-682.
Lucotte, Y. (2010). The choice of adopting inflation targeting in emerging economies: Do domestic institutions matter?.
Monfared, S. & Akin, F. (2017). The relationship between exchage rates and inflation: the case of Iran. European Journal of Sustainable Development, 6(4).
Nademi, Y. & Winker, P. (2022). Non-Linear effects of government size on inflation in OPEC Countries: A threshold panel approach. Iranian Economic Review, 26(1), 199-214.
Nguyen, T. D. (2019). Impact of government spending on inflation in Asian emerging economies: Evidence from India, China, and Indonesia. The Singapore Economic Review, 64(05), 1171-1200.
Nimatullayev, K. & Avazov, I. (2023). The Impact of Corporate Monopolies on Market Competition and Economic Health.
Nkoro, E. & Uko, A. K. (2016). Autoregressive Distributed Lag (ARDL) cointegration technique: application and interpretation. Journal of Statistical and Econometric methods, 5(4), 63-91.
Osman, A. M.; Ahmed, A. O.; Eltahir, M. N.; Mohamed, A. S.; Shidwan, O. S. & Ghada, M. (2019). Investigating the causes of inflation in Saudi Arabia: an application of autoregressive distributed lag (ARDL) model. International Journal of Applied Engineering Research, 14(21), 3980-3986.
Pesaran, M. H. (1997). The role of economic theory in modelling the long run. The economic journal, 107(440), 178-191.
Roncaglia de Carvalho, A.; Ribeiro, R. S. & Marques, A. M. (2018). Economic development and inflation: a theoretical and empirical analysis. International Review of Applied Economics, 32(4), 546-565.
Schreger, J.; Yared, P. & Zaratiegui, E. (2024). Central bank credibility and fiscal responsibility. American Economic Review: Insights, 6(3), 377-394.
Tariq, A.; Amin, A. & Ahmad, M. (2024). Deciphering the non-linear nexus between government size and inflation in MENA countries: an application of dynamic-panel threshold model. Journal of Economic Structures, 13(1), 14.
Tolasa, S.; Whakeshum, S. T. & Mulatu, N. T. (2022). Macroeconomic determinants of inflation in Ethiopia: ARDL approach to cointegration. European Journal of Business Science and Technology, 8(1), 96-120.
Turna, Y. & Özcan, A. (2021). The relationship between foreign exchange rate, interest rate and inflation in Turkey: ARDL approach. Journal of Ekonomi, 3(1), 19-23.
Yanescha, N. Y. P. (2022). Analysis of factors affecting inflation in Indonesia 2015-2020. Research Horizon, 2(2), 330-344.
Zhang, C. & Pang, H. (2008). Excess liquidity and inflation dynamics in China: 1997–2007. China & World Economy, 16(4), 1-15.

  • Receive Date 13 July 2024
  • Revise Date 25 November 2024
  • Accept Date 12 November 2024