The Impact of Extraordinary Inflation Expectations on Inflation in the Iranian Economy: A Quantile Regression Approach

Document Type : Scientific-research

Authors

1 Ph.D. student of economics, Qom University Senior Researcher, Department of Commerce, Office of Economic Studies, Research Center, Islamic Consultative Assembly

2 Associate Professor, Faculty of Economics, University of Qom,

3 Researcher of Majlis Research Center

Abstract


It is not possible to manage the inflation rate without recognizing the factors affecting it, including how the expected inflation is formed. It is not possible to manage the inflation rate without recognizing the factors affecting it, including how the expected inflation is formed. For this purpose, the annual data of inflation rate, production gap and expected inflation simulation during the years 1357 to 1395 have been used.
Based on the model estimation results, in the lower quantities of the inflation rate, the expected inflation using the past inflation rate is statistically more significant and the higher the inflation rate, the better the modeling using the past inflation trend gives better results. In the Iranian economy, which is associated with high levels of inflation, the formation of inflation expectations of economic agents is more compatible with the past inflation trend. Therefore, in order to reduce inflation expectations and achieve low levels of inflation in consecutive years, it is much more important to pay attention to the past inflation trend than the previous inflation rate.

Keywords

References

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Journal of Iranian Economic Issues
Volume 7, Issue 2
January 2021
Pages 343-364

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History

  • Receive Date: 13 April 2020
  • Revise Date: 24 May 2020
  • Accept Date: 25 July 2020

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