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Showing 3 results for Inflation Uncertainty
Khosro Piraee, Bahareh Dadvar,
Volume 11, Issue 1 (5-2011)
Abstract
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.
Sohrab Delangizan, Mohammad Karimi, Parastoo Amiriani,
Volume 17, Issue 1 (4-2017)
Abstract
This research examines the effect of monetary policies on unemployment under inflation uncertainty in Iran using the annual data during 1974-2011. The basic model is selected according to the simultaneous equilibrium of dynamic aggregate demand and supply. In addition, inflation uncertainty is calculated using the GARCH family models including ARCH, GARCH and EGARCH. The generated data from a novel model is considered as a proxy for inflation uncertainty, and Generalized Method of Moments (GMM) is used to estimate this model. The estimation results show that inflation uncertainty reduces the unemployment rate, i.e. the effect of monetary policies on unemployment is decreased under inflation uncertainty, and there is a significant and positive relationship between unemployment and inflation rates. Henceforth, an increase in inflation uncertainty leads to an increase in unemployment rate, which is in line with Friedman's theory in this field
Dr Sima Eskandari Sabzi,
Volume 22, Issue 3 (9-2022)
Abstract
High and unpredictable inflation rates reduce the demand for domestic money and increase the demand for alternative assets such as foreign currency. Currency substitution is a situation in which foreign currency is replaced for domestic money in doing monetary functions. The purpose of this article is to investigate the factors affecting currency substitution in Iran, with emphasis on inflation uncertainty. For this purpose, based on the data of 1978-2018, the degree of currency substitution is obtained using the Kamin-Ericsson (2003) method and the EGARCH model is used to calculate inflation uncertainty. The estimation of an autoregressive distributed lag model show that in the short- and long-run, rising inflation leads to increased currency substitution. Inflation uncertainty in the short run increases currency substitution after three lags. In the long run, inflation uncertainty has a positive relationship and economic growth has a significant inverse relationship with currency substitution. Given the impact of inflation and its uncertainty on currency substitution, inflation control policies should be considered by policymakers.
