Money and Inflation in the Islamic Republic of Iran

May 1, 2007

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Leo Bonato. Money and Inflation in the Islamic Republic of Iran, (USA: International Monetary Fund, 2007) accessed November 8, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper looks at the determinants of inflation in Iran. Unlike the traditional estimates of the demand function for real money balances, the approach followed here focuses on the relationship between nominal variables and inflation. The model estimates are used to address the questions raised by the decline in inflation that occurred up to the first half of 2006, looking at the structural stability of the estimated relationships and the ability of the model to predict inflation at the end of the sample. The estimates confirm the strong relationship between money and inflation when M1 is used, with no evidence of a structural change.

Subject: Demand for money, Exchange rates, Inflation, Inflation targeting, Nominal effective exchange rate

Keywords: Inflation equation, Price level, Rate of return, WP

Publication Details

Pages:

17
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2007/119
Stock No:

WPIEA2007119
ISBN:

9781451866834
ISSN:

1018-5941

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