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Inflation and Inflation Tax in Iran: A Threshold Regression ‘Laffer Curve’ Model

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  • Ahmad JafariSamimi
  • Habib Ansari Samani
  • Younes Nademi

Abstract

The purpose of this paper is examining the Laffer curve for inflation tax. To do so we have used Hansen (1996, 2000), threshold regression model to study whether a non-linear relationship between inflation Tax and inflation based on two regimes of inflation (low and high inflation regimes). Our findings support a standard Laffer curve shape in Iran with a threshold inflation rate of 15.24 percentage points. In other words, only at inflation below this rate inflation tax will increase as a result of higher inflation.

Suggested Citation

  • Ahmad JafariSamimi & Habib Ansari Samani & Younes Nademi, 2011. "Inflation and Inflation Tax in Iran: A Threshold Regression ‘Laffer Curve’ Model," Journal of Economics and Behavioral Studies, AMH International, vol. 3(3), pages 163-168.
    • Handle: RePEc:rnd:arjebs:v:3:y:2011:i:3:p:163-168
    DOI: 10.22610/jebs.v3i3.268
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    References listed on IDEAS

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