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Inflation and Economic Reforms for Controlling It: National Currency Reform Approach (in Persian)

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  • mehrara, mohsen

    (Iran)

  • alinejad mehrabani, ebrahim

    (Iran)

  • khandan, mehdi

    (Iran)

Abstract

Double-digit inflation over the past decades is one of the main problems in Iranchr('39')s economy. Economic policy has not been able to resolve this issue and control inflation. Continuing high inflation and devaluation of the Iranian Rial bring up the national currency reform debate (removing zeros from the national currency). This study uses the experiences of other countries with similar experiences, in order to evaluate such a reform in Iranian economy. The sample used here includes 61 currency reforms in 48 country. According to theoretical studies, 8 effective variables in controlling inflation have been introduced. Changes in these variables are measured by using the ordered probit model. The Results show that the proposed reform package that includes five economic reforms in order of importance are: 1. Reducing the government deficit, 2. Increasing central bank independence, 3. Reducing net debt to the banking system, 4. Reducing the exchange rate and 5. Higher GDP growth rates. Another important result is that these reforms will reduce inflation with a delay.

Suggested Citation

  • mehrara, mohsen & alinejad mehrabani, ebrahim & khandan, mehdi, 2015. "Inflation and Economic Reforms for Controlling It: National Currency Reform Approach (in Persian)," Journal of Monetary and Banking Research (فصلنامه پژوهش‌های پولی-بانکی), Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 8(25), pages 379-399, October.
    • Handle: RePEc:mbr:jmbres:v:8:y:2015:i:25:p:379-399
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    More about this item

    JEL classification:

    • B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General

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