Analysis of the Effects of Relative Price Variability and Monetary Shocks on Inflation in Iran’s Economy

Subject Areas : Applied Economics

مجید احمدلو ¹ , اکبر کمیجانی ² , کامبیز هژبر کیانی ³ , فرهاد غفاری ⁴

1 - ندارد
2 - مسئول مکاتبات
3 - ندارد
4 - ندارد

Received: 2013-10-09 Accepted : 2014-01-22 Published : 2013-03-21

Keywords: Inflation, Relative price variability and, liquidity, Dynamic panel data approach,

Abstract :

This paper analyzes the effects of relative price variability and skewness as aggregate supply shocks and liquidity as aggregate demand shocks on inflation in the Iranian economy. For this purpose, the total and state urban price index and M2 for period 1383-1390 and Arellano and Bover (1995) and Blundell and Bond (1998) method has been used. The results show that relative price variability and M2 has positive and meaningful effect on inflation. Also, relative price skewness have negative effect on inflation. So, it is needed to consider supply and demand shocks simultaneously in disinflation policies.