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:: Volume 9, Issue 31 (6-2020) ::
mieaoi 2020, 9(31): 147-171 Back to browse issues page
The impact of Expectations, Liquidity Surplus and Demand Side on Inflation Dynamics in Iran: Hybrid New Keynesian Phillips curve Approach
Reza Shakeri Bostanabad Mr 1, Zahra Rasouli Beirami Miss2, Mohsen Salehi Komrudi Mr2, Parisa Pakrooh Miss2
1- university of tehran , reza.shakeri@ut.ac.ir
2- university of tabriz
Abstract:   (344 Views)
What is the cause of inflation decrease in Iran after 2013? Some economists believe the cause is the control of the liquidity. But the others believe the cause is the decrease of the demand as well as the expected inflation. Therefore, this study seeks to answer: a) what is the effect of liquidity surplus on the general price increase? b) What is the expected inflation rate in Iran? And c) Can the factors of the demand side cause to decrease inflation? In this regard, Hybrid New Keynesian Phillips curve has been estimated in the Iranian economy during the 1973-2015 period using the generalized method of moments (GMM).The results of the study showed that the liquidity surplus based on M2 has a positive and significant effect on inflation. While the liquidity surplus based on M1 does not have a significant effect on inflation. This suggests that pseudo money, savings deposits and deposits are the main source of inflation. Also, Adaptive and rational expectations have a significant and positive impact on inflation and the effect of Adaptive expectations is higher than rational expectations. The results of the study indicate that the long-term Phillips curve in the Iranian economy is vertical.
 
Keywords: Inflation Expectations, Inflation Dynamics, Hybrid New Keynesian Phillips Curve, Liquidity Surplus, Iran.
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Type of Study: Applicable | Subject: Special
Received: 2020/01/4 | Accepted: 2020/06/20 | Published: 2020/06/30
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Shakeri Bostanabad R, Rasouli Beirami Z, Salehi Komrudi M, pakrooh P. The impact of Expectations, Liquidity Surplus and Demand Side on Inflation Dynamics in Iran: Hybrid New Keynesian Phillips curve Approach. mieaoi. 2020; 9 (31) :147-171
URL: http://mieaoi.ir/article-1-885-en.html


Volume 9, Issue 31 (6-2020) Back to browse issues page
نشریه اقتصاد و بانکداری اسلامی Islamic Economics & Banking
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