Inflation and Economic Reforms for Controlling It: National Currency Reform Approach (in Persian)

Mohsen Mehrara (), Ebrahim Alinejad Mehrabani () and Mehdi Khandan ()
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Mohsen Mehrara: Iran
Ebrahim Alinejad Mehrabani: Iran
Mehdi Khandan: Iran

Journal of Monetary and Banking Research (فصلنامه پژوهش‌های پولی-بانکی), 2015, vol. 8, issue 25, 379-399

Abstract: Double-digit inflation over the past decades is one of the main problems in Iranchr('39')s economy. Economic policy has not been able to resolve this issue and control inflation. Continuing high inflation and devaluation of the Iranian Rial bring up the national currency reform debate (removing zeros from the national currency). This study uses the experiences of other countries with similar experiences, in order to evaluate such a reform in Iranian economy. The sample used here includes 61 currency reforms in 48 country. According to theoretical studies, 8 effective variables in controlling inflation have been introduced. Changes in these variables are measured by using the ordered probit model. The Results show that the proposed reform package that includes five economic reforms in order of importance are: 1. Reducing the government deficit, 2. Increasing central bank independence, 3. Reducing net debt to the banking system, 4. Reducing the exchange rate and 5. Higher GDP growth rates. Another important result is that these reforms will reduce inflation with a delay.

JEL-codes: B31 E31 E50 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:mbr:jmbres:v:8:y:2015:i:25:p:379-399

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