International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss

Determinants of Inflation in Islamic Republic of Iran
Fariba Chavoshzadeh Tafti

In this paper, we measure and analyze the determinants of inflation in Islamic Republic of Iran. After briefly reviewing the theoretical background, we use Johansen and Juselius maximum likelihood method. Additionally, we use the VAR method. For this purpose, Impulse Response Functions (IRF) and Forecast Error variance Decomposition (FEVD) are also used. Our analysis is based on time serious quarterly data from 1971:1-2005:4 and our results show that the response of the consumer price index (CPI) to shock in GDP is too weak and the response of CPI to shocks in import price index and liquidity is initially positive.

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