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Common Trends and Structural Change: A Dynamic Macro Model for the Pre- and Postrevolution Islamic Republic of Iran

Author

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  • Mr. Torbjorn I. Becker

Abstract

This paper uses a common trends model to study how prices, the black market exchange rate, money, and real output have developed over a period covering both pre- and post-revolution Iranian data. It is shown that monetary shocks have significant short-run effects on output, but permanent effects on the price level and exchange rate, that is, expansionary monetary policy is not consistent with achieving low inflation or a stable unified exchange rate. The real shocks generate higher growth and lower inflation, suggesting that supply-side policies are consistent with the goals in the Islamic Republic of Iran’s second five-year development plan.

Suggested Citation

  • Mr. Torbjorn I. Becker, 1999. "Common Trends and Structural Change: A Dynamic Macro Model for the Pre- and Postrevolution Islamic Republic of Iran," IMF Working Papers 1999/082, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1999/082
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    Citations

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    Cited by:

    1. Esfahani, Hadi Salehi & Mohaddes, Kamiar & Pesaran, M. Hashem, 2013. "Oil exports and the Iranian economy," The Quarterly Review of Economics and Finance, Elsevier, vol. 53(3), pages 221-237.
    2. Khashadourian Edmund & Grammy Abbas P, 2004. "The Political Economy of Growth-Inflation Transmission: The Case of Iran," Review of Middle East Economics and Finance, De Gruyter, vol. 2(2), pages 22-34, August.
    3. Bonato Leo, 2008. "Money and Inflation in the Islamic Republic of Iran," Review of Middle East Economics and Finance, De Gruyter, vol. 4(1), pages 41-58, January.
    4. Saeed P. Langarudi & Michael J. Radzicki, 2018. "A Simulation Model of Katouzian's Theory of Arbitrary State and Society," Forum for Social Economics, Taylor & Francis Journals, vol. 47(1), pages 115-152, January.
    5. Dizaji, S.F., 2011. "Analysis of domestic price and inflation determinants in Iran (as a developing oil-export based economy)," ISS Working Papers - General Series 530, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    6. Mr. Papa M N'Diaye, 2003. "Determinants of Deflation in Hong Kong SAR," IMF Working Papers 2003/250, International Monetary Fund.

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