Causes of inflation in the Iranian economy, 1972-1990

Tavakkoli, Ahmad (1996) Causes of inflation in the Iranian economy, 1972-1990. PhD thesis, University of Nottingham.

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Abstract

Inflation has been the focus of numerous investigations in recent decades, both for developed and developing countries. Although there is a general understanding about the consequences of inflation, its causes and cure are still controversial issues among economists. None of the two competitive views concerned with developing countries , Monetarism and Structuralism, provides a wholly successful theoretical model to explain price behaviour. This thesis attempts to suggest a synthesis for more appropriate modeling.

Empirically, the most commonly used modeling strategy has been to adapt a monetary model subject to some modifications for the developing countries, reflecting structural elements, which may be named an analytical model. This investigation considers much empirical evidence and points out the shortcomings of the models used and the econometric procedures carried out. In particular, several recent studies of inflation in the Iranian economy are evaluated. This evaluation indicates that the single equation estimation and/or ignorance of integration and co integration in these researches are two features to be questioned.

This thesis uses a simultaneous equations model originally made for four non-oil developing countries. Adapting the model for Iran, a major oil exporting country, leads to a model containing three behavioural equations (price, government revenue and income) and two definitional equations (money and expected inflation). This model, treating income, money and government revenue as endogenous, attempts to take into account the special structural features of the economy beside monetary elements.

A vector autoregressive approach in a multiple cointegration context is the estimation procedure used in this study. The results generally confirm predicted price determination and indicate the importance of the oil sector in both government revenue and production.

Item Type:Thesis (PhD)
Supervisors:Bates, J.M.
Fielding, D.
Uncontrolled Keywords:Inflation, Iran
Faculties/Schools:UK Campuses > Faculty of Social Sciences, Law and Education > School of Economics
ID Code:1678
Deposited By:Ms Valerie Airey
Deposited On:25 Nov 2010 13:50
Last Modified:25 Nov 2010 13:50

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