External Shocks, Cost Push and Stagflation in Iran
Two major sources of inflationary forces in Iran's economy during the past three decades have been the exchange rate depreciation and soaring imported goods prices, and the imbalance between the nominal scale of the economy and its production capacity. In the period of 2012-2022, the main cause...
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| Format: | Article |
| Language: | fas |
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Institute for Management and Planning Studies
2023-09-01
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| Series: | برنامهریزی و بودجه |
| Subjects: | |
| Online Access: | http://jpbud.ir/article-1-2227-en.pdf |
| _version_ | 1827632466961104896 |
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| author | Seyyed Ahmad Reza Jalali Naeini Shahbod Seighalani |
| author_facet | Seyyed Ahmad Reza Jalali Naeini Shahbod Seighalani |
| author_sort | Seyyed Ahmad Reza Jalali Naeini |
| collection | DOAJ |
| description | Two major sources of inflationary forces in Iran's economy during the past three decades have been the exchange rate depreciation and soaring imported goods prices, and the imbalance between the nominal scale of the economy and its production capacity. In the period of 2012-2022, the main cause for exchange rate depreciation and the most important driver of cost upsurge was the international sanctions. In this period, the demand-side policies, specifically monetary policy, were reactive and could not restrain inflationary pressures emanating from the foreign shocks. In contrast, during the period 2001-2011, fiscal and monetary expansions led to aggregate demand expansion, however, due to the stability of the exchange rate and the supply chains, inflation remained relatively in check over the medium run. The stability of the nominal exchange rate also increased the demand for Rial as a financial asset thereby absorbing growth in M2. The average annual growth rate of M2 in the decade of sanctions (2012-2022) was two and a half percent higher than the previous decade, but the average annual inflation rate was nearly fourteen percent higher. After re-imposition of sanctions by the USA in 1998, the average annual inflation rate rose to above 42% and remained significantly higher than the long-term trend. According to the findings of this paper, the difference in output and inflation during the last two decades can be attributed to the occurrence of external shocks and their impact on the cost of production and on the supply chain. |
| first_indexed | 2024-03-09T14:45:55Z |
| format | Article |
| id | doaj.art-ea4dce317c4441c9a5763ca55b4765b2 |
| institution | Directory Open Access Journal |
| issn | 2251-9092 2251-9106 |
| language | fas |
| last_indexed | 2024-03-09T14:45:55Z |
| publishDate | 2023-09-01 |
| publisher | Institute for Management and Planning Studies |
| record_format | Article |
| series | برنامهریزی و بودجه |
| spelling | doaj.art-ea4dce317c4441c9a5763ca55b4765b22023-11-27T08:08:47ZfasInstitute for Management and Planning Studiesبرنامهریزی و بودجه2251-90922251-91062023-09-012824589External Shocks, Cost Push and Stagflation in IranSeyyed Ahmad Reza Jalali Naeini0Shahbod Seighalani1 Department of Economics and Systems, Institute for Management and Planning Studies, Tehran, Iran Department of Economics and Systems, Institute for Management and Planning Studies, Tehran, Iran, Two major sources of inflationary forces in Iran's economy during the past three decades have been the exchange rate depreciation and soaring imported goods prices, and the imbalance between the nominal scale of the economy and its production capacity. In the period of 2012-2022, the main cause for exchange rate depreciation and the most important driver of cost upsurge was the international sanctions. In this period, the demand-side policies, specifically monetary policy, were reactive and could not restrain inflationary pressures emanating from the foreign shocks. In contrast, during the period 2001-2011, fiscal and monetary expansions led to aggregate demand expansion, however, due to the stability of the exchange rate and the supply chains, inflation remained relatively in check over the medium run. The stability of the nominal exchange rate also increased the demand for Rial as a financial asset thereby absorbing growth in M2. The average annual growth rate of M2 in the decade of sanctions (2012-2022) was two and a half percent higher than the previous decade, but the average annual inflation rate was nearly fourteen percent higher. After re-imposition of sanctions by the USA in 1998, the average annual inflation rate rose to above 42% and remained significantly higher than the long-term trend. According to the findings of this paper, the difference in output and inflation during the last two decades can be attributed to the occurrence of external shocks and their impact on the cost of production and on the supply chain.http://jpbud.ir/article-1-2227-en.pdfinflationary stagnationmonetary policydsge modelcost push inflationexchange rateiran. |
| spellingShingle | Seyyed Ahmad Reza Jalali Naeini Shahbod Seighalani External Shocks, Cost Push and Stagflation in Iran برنامهریزی و بودجه inflationary stagnation monetary policy dsge model cost push inflation exchange rate iran. |
| title | External Shocks, Cost Push and Stagflation in Iran |
| title_full | External Shocks, Cost Push and Stagflation in Iran |
| title_fullStr | External Shocks, Cost Push and Stagflation in Iran |
| title_full_unstemmed | External Shocks, Cost Push and Stagflation in Iran |
| title_short | External Shocks, Cost Push and Stagflation in Iran |
| title_sort | external shocks cost push and stagflation in iran |
| topic | inflationary stagnation monetary policy dsge model cost push inflation exchange rate iran. |
| url | http://jpbud.ir/article-1-2227-en.pdf |
| work_keys_str_mv | AT seyyedahmadrezajalalinaeini externalshockscostpushandstagflationiniran AT shahbodseighalani externalshockscostpushandstagflationiniran |