Inflation and Inflation Tax in Iran: A Threshold Regression ‘Laffer Curve’ Model

Ahmad JafariSamimi, Habib Ansari Samani and Younes Nademi

Journal of Economics and Behavioral Studies, 2011, vol. 3, issue 3, 163-168

Abstract: The purpose of this paper is examining the Laffer curve for inflation tax. To do so we have used Hansen (1996, 2000), threshold regression model to study whether a non-linear relationship between inflation Tax and inflation based on two regimes of inflation (low and high inflation regimes). Our findings support a standard Laffer curve shape in Iran with a threshold inflation rate of 15.24 percentage points. In other words, only at inflation below this rate inflation tax will increase as a result of higher inflation.

Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:rnd:arjebs:v:3:y:2011:i:3:p:163-168

DOI: 10.22610/jebs.v3i3.268

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