Investigating the Sudden Changes in the Money on the Welfare cost of Inflation in Iran

Document Type : Research Article

Authors

1 Ph.D. student, Department of Economics, Abarkouh Branch, Islamic Azad University, Yazd, Iran.

2 Assistant Professor, Department of Humanities, Yazd Branch, Islamic Azad University, Yazd, Iran

3 Associate Professor Department of Economics, Abarkouh Branch, Islamic Azad University, Yazd, Iran.

Abstract

The present study examines between inflation and prosperity for the Iranian economy in the Q1 1367 - Q1 1399 and its nonlinear relationship with increasing money with the Markov switching approach. For this purpose, using a standard method that was followed by Lucas (2000), Ireland (2009) and Mogliani and Urga (2018), two demand functions with full logarithm and semi-logarithmic specification are estimated. The results indicate a nonlinear relationship between the volume of money and the cost of inflation. Also, at the interest rate, 10% of inflation welfare costs for a complete logarithm model in the diet of 0.75% GDP in the diet were two 0.67% GDP and in the diet of 0,78% GDP. And for the semi-logarithmic model in the diet, 0.039% of GDP in the diet is two 0.036% GDP and in the diet of 0.031% GDP. In addition, an orientation in monetary policies and increasing the volume of money caused instability in the performance of money and the cost of inflation.

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References

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Journal of Applied Economics Studies in Iran
Volume 11, Issue 42
August 2022
Pages 279-313

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