The relationship between money, government spending and inflation in the Iranian economy

Journal article | Zeitschriftenartikel

Inflation is one of the important macroeconomic variables that has a close relationship with many of the real and monetary variables and has unfavorable effects such as loss of productivity, reduction of economic growth, and rise of economic inequality. Therefore, the reduction of inflation has always been the most important economic objective of policy makers. The main objective of this study is to examine the relationship between, inflation, money supply and government spending in Iran during the period 1959-2010. To that end, Bayesian econometric approach was used. The results of the Bayesian Model averaging method imply that the growth rate of money, economic growth rate, inflation rate, the logarithm of the ratio of liquidity to GDP, and growth in energy prices had a significant positive significant effect on inflation. Among these 3 variables, growth rate of money has the highest impact on inflation. The results showed that the growth rate of government spending, GDP growth rate and the exchange rate had no significant effect on the inflation. Therefore, the study recommends controlling the inflation through decline in liquidity growth rate, and energy prices.

Object Details

• ISSN: 2300-2697
• Extent: Seite(n): 89-94
• Language: Englisch
• Notes: Status: Veröffentlichungsversion; begutachtet (peer reviewed)

References and Relationships

• Bibliographic citation: International Letters of Social and Humanistic Sciences(51)

Classification and Topics

• Subject: Wirtschaft ; Wirtschaftspolitik ; Iran ; Geld ; Inflation ; öffentliche Ausgaben ; Staat ; Wirtschaftswachstum ; Wirtschaft ; Energie ; Preis ; Liquidität ; Wechselkurs

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Mehrara, Mohsen ; Sujoudi, Ahmad
• Event: Veröffentlichung
• (where): Schweiz
• (when): 2015

Further information

• DOI: https://doi.org/10.18052/www.scipress.com/ILSHS.51.89
• Rights: GESIS - Leibniz-Institut für Sozialwissenschaften. Bibliothek Köln
• Last update: 21.06.2024, 4:27 PM CEST