Babak Esmaeili
Abstract
This paper aims to study the non-linear and threshold effects of the macroeconomics variables on inflation in Iran's economy using the sequential seasonal periodic data from 1991 to 2018 based on the Soft Transition Regression (STR).In the developed model, the cash growth was selected as threshold variable ...
Read More
This paper aims to study the non-linear and threshold effects of the macroeconomics variables on inflation in Iran's economy using the sequential seasonal periodic data from 1991 to 2018 based on the Soft Transition Regression (STR).In the developed model, the cash growth was selected as threshold variable with the approximate sum of 4.22 percent (17 percent a year) as the threshold limit. The results show that the linear approximation cannot satisfactorily explain the non-linear effects of the oil incomes and other variables in different regimes. In other words, the sequential non-linear pattern, having considered the regime changes and the changing indices during time, is better able to explain the inflation behavior in Iran’s economy in comparison with the linear pattern and can demonstrate the dynamics effects of the macro nominal and literal variables on inflation in Iran’s economy more comprehensively.The results show that, depending on the regime conditions, other macro variables such as current expenditures, construction expenditures and economic growth exacerbate inflation. Moreover, in high regime, the price level deviation from the long-term balanced relation, is a very significant factor in inflation acceleration, to such extent that inflation exorbitantly reacts to this gap. Gross domestic product and its hindrance have anti-inflammatory effects in most regimes.In different regimes the oil incomes have not had meaningful or significant effects on inflation, as it seems that the effect of this variable on inflation is controlled to a very great extent by other variables.According to the findings, it seems that cash growth is the most important factor of regime change in the relationship between inflation and other macro variables in the economy of Iran. The legislation authority, by controlling the cash growth and transferring it to the low growth regime, is able to abort or reduce the effect of many other variables such as current or construction expenditures.
Ahmad Jafari Samimi; Jalal Montazeri Shoorekchali; Musa Tatar
Volume 4, Issue 13 , January 2014, , Pages 128-117
Abstract
Regarding the important role of health in economic growth and development, the purpose of the present paper is to investigate the impact of life expectancy, as the most important indicator of health, on economic growth in Iran during 1965-2009. The estimated Smooth Transition Regression (STR) model supports ...
Read More
Regarding the important role of health in economic growth and development, the purpose of the present paper is to investigate the impact of life expectancy, as the most important indicator of health, on economic growth in Iran during 1965-2009. The estimated Smooth Transition Regression (STR) model supports a nonlinear threshold behavior in the relationship between life expectancy and economic growth in the country in a two regime structures with a threshold level of 55.34 years. In other words, our findings are both consistent with Acemoglu and Johnson (2007) for the negative impact and with demographic transition theory for the reducing effect of life expectancy on economic growth in Iran. This shows the country is approaching the stage of the fertility transition, where the increase in life expectancy will bring about a decline in population.
