Journal of Iranian Economic Issues

Journal of Iranian Economic Issues

Investigating the Impact of Crime and Security Risk on the Inflation Rate in Iran

Document Type : Scientific-research

Authors
Ramin Amani 1
Khaled Ahmadzadeh 2
Mohammad Parsa Ehterami 3
Sana Hosseini 4
1 Ph.D. Candidate in Economics, Department of Economic Development and Planning, Faculty of Management and Economics, Tarbiat Modares University, Tehran, Iran.
2 Associate Professor, Department of Economics, Faculty of Humanities and Social Sciences, University of Kurdistan, Sanandaj, Iran
3 Ph.D. Student, Department of Economics, Faculty of Humanities and Social Sciences, University of Kurdistan, Sanandaj, Iran
4 M.Sc. Student in Economics, Department of Economic Sciences, Faculty of Humanities and Social Sciences, University of Kurdistan, Sanandaj, Iran
10.30465/ce.2025.51439.2023
Abstract
Inflation has long been a core challenge of macroeconomic policy in Iran, making the identification of its key drivers highly significant. Among these, crime and security risk, though a non-economic variable, can exert a meaningful influence on inflation by reducing investment, increasing transaction costs, and weakening public confidence. This study aims to examine the impact of crime and security risk on Iran’s inflation rate from 2014 to 2024 using a Structural Vector Autoregression approach. The model’s results indicate that liquidity, exchange rate, and inflation expectations are the most influential factors affecting inflation. Liquidity has the most significant impact, with a coefficient of 0.413, primarily due to its role in increasing demand-side pressures. Both exchange rate fluctuations and inflation expectations also have a direct effect on inflation. In addition to these, crime and security risk, despite a smaller coefficient of 0.083, play a notable role in driving inflation. Such risks contribute to inflation by disrupting economic activity and reducing investor confidence. Impulse response functions show that the impact of this risk is significant in the short term but diminishes over time. Furthermore, variance decomposition analysis reveals that crime and security risk account for approximately 23.9% of inflation fluctuations across different periods.
Keywords
Crime risk
security risk
inflation rate
SVAR model
Iran

Subjects

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  • Receive Date 10 March 2025
  • Revise Date 14 April 2025
  • Accept Date 26 April 2025