Testing the effect of foreign and domestic price shocks on the inflow of capital market to Iran

Subject Areas : Agriculture Marketing and Commercialization

Ghazaleh Tajilro ¹ , Jalal Seifodini ² , Somayeh Shokravi ³

1 - Department of Financial Management, Islamshahr branch, Islamic Azad University, Islamshahr, Iran
2 - Department of Financial Management Islamic Azad University, Islamshahr branch, Islamshahr, Iran
3 - Department of Economics, Islamic Azad University, Islamshahr branch, Islamshahr, Iran

Received: 2021-09-21 Accepted : 2022-05-13 Published : 2022-06-01

Keywords: Iran, Foreign price shocks (exchange rate changes), domestic price shocks (inflation rate changes), capital inflows and transfer payments,

Abstract :

The purpose of this study is to test the effect of foreign and domestic price shocks on the inflow of the capital market to Iran. To achieve this goal, first, the theoretical foundations and research background (internal and external studies) were studied, then the research model for Iran from the period 2000-to 2019 was estimated, and research hypotheses were tested. The results of the research, while confirming the hypotheses of the research, showed that exchange rate fluctuations have a negative and significant effect on the inflow of capital and transfer payments of a country. Inflation uncertainty, which indicates the inefficiency of economic policies in the country, has also been a negative factor in attracting the inflow of capital to Iran. Increasing capital stock and spot prices have a positive and significant effect on attracting capital inflows to Iran and transfer payments. Finally, some suggestions for increasing the inflow of capital investment are presented according to the research results.

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