Download citation:
BibTeX | RIS | EndNote | Medlars | ProCite | Reference Manager | RefWorks
Send citation to:

---

Hyper inflation rates impose direct and indirect costs upon society. It has undesirable consequences that are caused by inflation uncertainty. In this regard, the following questions are raised: How do inflation rate and its uncertainty affect economic growth? Does the structural breakpoint affect relationship between inflation and growth rate? In this study the above questions are examined for the Iran's economy in period 1974-2007. For this purpose the regressive model is applied. In this model, growth rate of GDP depends on inflation rate, growth rate of the money supply, growth rate of the real gross fixed capital formation and inflation uncertainty. For the measuring inflation uncertainty Generalized Autoregressive Conditional Heteroskedasticity (GARCH) model is used. Based on data analysis, structural break point occurs at inflation rate equal to 20 percent. Results show that the impact of inflation rate on economic growth is significantly negative but it minimizes at the rate of less than 20 percent and increases at the rate of more than 20 percent. Moreover, inflation uncertainty has significant and negative effect on growth.

Keywords: economic growth, Inflation, Inflation Uncertainty, Structural Break, GARCH model JEL Classification: E31, O41, D81

Full-Text [PDF 159 kb]   (8382 Downloads)    

Add your comments about this article : Your username or Email:

---