bu ali sina university Journal of Applied Economics Studies in Iran 2322-2530 8 30 2019 08 23 Empirical Investigation of the Impact of Core Inflation on Economic Growth in Iran: Application of MIDAS Models Empirical Investigation of the Impact of Core Inflation on Economic Growth in Iran: Application of MIDAS Models 1 23 2808 10.22084/aes.2019.18162.2804 FA Yekta Ashrafi Economic affairs research institute Roozbeh Balounejad Nouri Khatam university 0000-0002-9355-2554 Fatemeh Jahangard Ph.D student of Allameh Tabataba'i University Journal Article 2018 12 16 From the monetary authority perspective, all parts of fluctuations in CPI don’t have the same importance for implementing monetary policy and also don’t have the same impact on economic growth. The CPI fluctuations can be separated into two main parts: the permanent part and the temporary or transient part. In the long run the changes in relative prices which are originated from temporary shocks, because of price flexibility and substitution of goods by consumer, will be adjusted and as a result will not have significant effect on Inflation and economic growth.  Consequently, monetary authority should not take into account the temporary part of CPI fluctuations in implementing the monetary policy. Some economists assert that it will be better if monetary authority implements the policies just based on the core inflation. In the present study, we have first calculated the core inflation and then investigated the effect of core inflation on economic growth. To this end, we have used the data over the 2005-2018 period and MIDAS method. Results indicate that financial depth, core inflation and oil revenues have negative and significant effect on economic growth. Also, results show that openness, government spending on infrastructure, capital stock and active population have significant and positive effect and employment permits have no significant effect on economic growth From the monetary authority perspective, all parts of fluctuations in CPI don’t have the same importance for implementing monetary policy and also don’t have the same impact on economic growth. The CPI fluctuations can be separated into two main parts: the permanent part and the temporary or transient part. In the long run the changes in relative prices which are originated from temporary shocks, because of price flexibility and substitution of goods by consumer, will be adjusted and as a result will not have significant effect on Inflation and economic growth.  Consequently, monetary authority should not take into account the temporary part of CPI fluctuations in implementing the monetary policy. Some economists assert that it will be better if monetary authority implements the policies just based on the core inflation. In the present study, we have first calculated the core inflation and then investigated the effect of core inflation on economic growth. To this end, we have used the data over the 2005-2018 period and MIDAS method. Results indicate that financial depth, core inflation and oil revenues have negative and significant effect on economic growth. Also, results show that openness, government spending on infrastructure, capital stock and active population have significant and positive effect and employment permits have no significant effect on economic growth https://aes.basu.ac.ir/article_2808_d0010a6f34908640a4a6da2389772a78.pdf