bu ali sina university Journal of Applied Economics Studies in Iran 2322-2530 13 49 2024 04 20 A Study of Relation Between Macroeconomic Variables and Inflation Rate in Iran Using Wavelet Coherency, MODWT Wavelet and Granger Causality Method A Study of Relation Between Macroeconomic Variables and Inflation Rate in Iran Using Wavelet Coherency, MODWT Wavelet and Granger Causality Method 9 40 4864 10.22084/aes.2022.26524.3481 FA Hamide Danesh PhD Student of Economics, Department of Economics, Faculty of Economics and Social Sciences, Shahid Chamran University of Ahvaz, Ahvaz, Iran Seyed Aziz Arman Professor, Department of Economics, Faculty of Economics and Social Sciences, Shahid Chamran University of Ahvaz, Ahvaz, Iran Ebrahim Anvari Associate Professor, Department of Economics, Faculty of Economics and Social Sciences, Shahid Chamran University of Ahvaz, Ahvaz, Iran 0000-0002-6050-8645 Sayed Amin Mansouri Associate Professor, Department of Economics, Faculty of Economics and Social Sciences, Shahid Chamran University of Ahvaz, Ahvaz, Iran Ahvaz, Ahvaz, Iran. Journal Article 2022 07 01 Abstract<br />Examining Iran’s economic developments over the past five decades shows that Iran’s economy has always had a high inflation rate. Therefore, it is very important to investigate the factors affecting inflation in the country. The purpose of this research is to investigate the relationship between macroeconomic variables including liquidity, monetary base, oil revenues, budget deficit, economic growth and inflation rate in Iran in the period of 1991-2020. For this purpose, the combination of two approaches of maximum overlap discrete wavelet- Granger causality and wavelet coherence based on the continuous wavelet approach has been used. The advantage of using the wavelet approach is that it allows the analysis of variables in two dimensions of time and frequency. The results of the analysis of both approaches showed that in the short term, oil revenues increase inflation. The results of the long-term research showed that the inflation rate increases the growth of liquidity. Finally, in the long term, oil revenues have been the cause of inflation, and in the short term, the inflation rate has been a factor affecting the growth rate of the budget deficit. Analyzing the phase difference in the time series of economic growth and inflation shows that in the long-term economic growth with oil and inflation are out of phase. In other words, economic growth with oil and inflation does not move in the same direction. Abstract<br />Examining Iran’s economic developments over the past five decades shows that Iran’s economy has always had a high inflation rate. Therefore, it is very important to investigate the factors affecting inflation in the country. The purpose of this research is to investigate the relationship between macroeconomic variables including liquidity, monetary base, oil revenues, budget deficit, economic growth and inflation rate in Iran in the period of 1991-2020. For this purpose, the combination of two approaches of maximum overlap discrete wavelet- Granger causality and wavelet coherence based on the continuous wavelet approach has been used. The advantage of using the wavelet approach is that it allows the analysis of variables in two dimensions of time and frequency. The results of the analysis of both approaches showed that in the short term, oil revenues increase inflation. The results of the long-term research showed that the inflation rate increases the growth of liquidity. Finally, in the long term, oil revenues have been the cause of inflation, and in the short term, the inflation rate has been a factor affecting the growth rate of the budget deficit. Analyzing the phase difference in the time series of economic growth and inflation shows that in the long-term economic growth with oil and inflation are out of phase. In other words, economic growth with oil and inflation does not move in the same direction. https://aes.basu.ac.ir/article_4864_a68259547f3d25ab3c0a5c0adb4e3498.pdf