Examining the Inflationary Effects of Exchange Rates, Bank Credit Payments, and Investment in Iran's Agriculture Sector

Khaledi, Koohsar; Fahimifard, Seyed Mohammad; Shemshadi, Katayoon

doi:10.30465/ce.2025.50594.2002

Examining the Inflationary Effects of Exchange Rates, Bank Credit Payments, and Investment in Iran's Agriculture Sector

Document Type : Scientific-research

Authors

koohsar khaledi ¹

Seyed Mohammad Fahimifard ²

Katayoon Shemshadi ¹

¹ Assistant Professor of Agricultural Economics, Agricultural Planning, Economic and Rural Development Research Institute (APERDRI), Tehran, Iran

² Assistant Professor of Agricultural Economics, Agricultural Planning, Economic and Rural Development Research Institute (APERDRI),Tehran, Iran

10.30465/ce.2025.50594.2002

Abstract

Iran's economy has been struggling with currency shocks and double-digit inflation rates for years. Some decision-makers in the money market, without distinguishing between the types of payment facilities, have linked the existence of a part of the inflation to the payment of bank facilities. The main objective of the present study is to examine the role of exchange rate shocks, bank facilities paid to the Iranian agricultural sector and agricultural investment on total consumer inflation and food inflation using statistics from 1991 to 2022 and the structural vector autoregression (SVAR) model. The results of the study, on the one hand, indicate the reducing effect of facilities paid to the agricultural sector and agricultural investment on the total inflation rate and the food inflation rate, and on the other hand, indicate the increasing effect of the unofficial free market exchange rate on the total inflation rate and the food inflation rate. According to the results of the study, and in order to control the inflation rate, emphasis is placed on controlling the exchange rate and continuing and increasing the payment of preferential bank facilities to the Iranian agricultural sector.

Keywords

Inflation

Credits

Investment

Agricultural Finance

Structural Vector Autoregression Model (SVAR)

Subjects