Economic Research and Perspectives

Economic Research and Perspectives

Investigating the Reasons for the Continuation of Inflationary Policies in Iran from the Perspective of the Analytical Level of Development

Authors
saeedeh alizadeh 1
Farshad Momeni 2
1 Assistant Professor of Economics, Economic Research Institute, Tarbiat Modares University, Tehran, Iran
2 Professor of Economics, Allameh Tabataba`i University, Tehran, Iran
Abstract
Aims and Introduction:

No economic variable like inflation confronts the society with social, cultural, political and even national security disturbances. Inflation greatly reduces trust in the economic, social and political structure and causes a significant reduction in social control.

Therefore, it is reasonable that in the field of economic and social policies on a global scale, sensitivity is applied to the effects of economic policies on inflation. In looking at the issue of inflation from the level of development, for numerous reasons, no approach will have a high explanatory ability as the approach of political economy. The political economy approach to development is an ultimatum approach that identifies and analyzes the main root of problems by focusing on the final winners and losers of the flawed policy cycles in the economy. The main goal of this research is to explain why the economic policymaking field of Iran's economy tends to adopt inflationary policies from the perspective of political economy with emphasis on the level of development.

Methodology:

In this research, using the analytical approach of the political economy of development, we have looked for the reason for the adoption of inflationary policies and their continuation and strengthening in the Iranian economy during 1989-2019. In this research, using the analytical and descriptive method and official data, an attempt has been made to investigate why the will of economic policymaking in Iran tends to adopt has inflationary policies and to evaluate the effects of inflation on the radius of trust and social cooperation based on trust. This research focuses on cognitive aspect of the causes of inflation in Iran and relies on political economy of inflation.

Findings:

In this research, by correcting the view of the causes of inflation in Iran's economy, it has been tried to investigate why the will of economic policy-making in Iran tends to adopt inflationary policies, And the main question of the research was explained under the three axes of dominant culture of rent, wrong incentives for policy makers and political economy of interest groups.

Disregarding science and preferring everyday considerations, a specific mindset and benefit ruling the policy-making system and the discussion of the beneficial and unproductive groups whose interests are in line with unproductive policies, the bottlenecks of political economy and the wrong incentives of politicians in the field of political and economic are main causes of inflation persistency.

Discussion and Conclusion:

Finally, it can be concluded that with a correct inflation targeting logic, it is possible to design a plan under the title of production-oriented based on the reduction of corruption and the evolution of the reward system, along with ensuring the security of property rights. In fact, with the aim of focusing on the issue of production from two angles, changing the mechanism of the reward system and controlling corruption through reorganizing the mental and thought structures governing the society, especially the policy-making and decision-making system, we may move towards an institutional structure that promotes correct thinking in the policy-making arena. This idea comes out of the heart of that development; such a program definitely needs help from a correct logic of targeting in the policy field. The most important result of such program will definitely be the reduction of the general level of prices.
Keywords
Political economy of inflation
Inflation
Analytical level of development
Production-oriented plan

Subjects

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Economic Research and Perspectives
Volume 23, Issue 3
Autumn 2023
Pages 159-187