Simulation of Heterogeneous Inflation Expectations in Iran

Subject Areas : Labor and Demographic Economics

saeed  isazadeh ¹ (Associate Professor, University of Buali Sina, Hamedan, Iran, email: [e-mail])
habib  morovat ² (Assistant Professor, University of Allameh Tabatabaei, Tehran, Iran, email: [e-mail])
omid  sharifi ³ (PhD. Candidate, University of Buali Sina, Hamedan, Iran (Corresponding Author), email: [e-mail])

Received: 2017-03-13 Accepted : 2017-03-13 Published : 2017-02-19

Keywords: C63, Heterogeneous Expectations, JEL Classification: C53, C62, E31. Keywords: Inflation, Agent-based model, Extroverted Expectations,

Abstract :

In this paper by considering importance of inflation expectations, its formation quality has investigated by regarding heterogeneous economic agents and by factor based computing model, expected inflation in Iran economy has simulated with lest forecasting error squares during 1979-2013. On the base of the assumptions, individuals have been divided into two groups with extroverted and regressive to trend expectations in which the ratio of these groups can change over time. The results show that the economic agents with extroverted inflationary expectations have an important role in inflation durability and changing the behavioral parameters of economic agents affects inflation expectation. Therefore, because of the possibility of endogenous dynamism mobility in the model, it is better that Policy-makers notice to the condition of inflationary expectations change in making polices.  

References:

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