The Effect of Governance and Political Instability Determinants on Inflation in Iran

Seyed Morteza Khani Hoolari, Abbas Ali Abounoori and Teymour Mohammadi

MPRA Paper from University Library of Munich, Germany

Abstract: Empirical literature that examines the determinants of inflation in Iran has suggested inflation as a monetary phenomenon. This study investigates the effect of political instability and governance parameters on inflation in Iran over 1959 to 2010. This research sought to identify the profound factors which determine inflation in Iran. Using a combination of the predictions of Fiscal Theory of Price Level (FTPL) determination and Political Economy of Macroeconomic Policy (PEMP) literature and applying the Generalized Method of Moments (GMM), we study this relationship through two different models. The results of monetary model indicate that the effects of monetary determinants depend on the political environment of Iran. The political model expresses a positive relationship between inflation and political instability and governance parameters.

Keywords: Governance; Political; instability; Major; Cabinet; Changes; Government; Crisis; Inflation (search for similar items in EconPapers)
JEL-codes: C52 O38 P48 (search for similar items in EconPapers)
Date: 2014-01, Revised 2014-03
New Economics Papers: this item is included in nep-ara, nep-cwa, nep-mon and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in Journal of Applied Science and Agriculture 9.3(2014): pp. 965-973

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:55827

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