Exchange Rate Pass-Through to Price Indices of Goods and Inflation in Iran

Document Type : Research Paper

Authors

1 Associate Professor of Economics, Department of Economics, University of Mazandaran, Babolsar

2 Ph. D., Student in Economics, Department of Economics, University of Mazandaran, Babolsar, Iran

Abstract

This paper measures the effects of exchange rate variation on price indices of different goods and inflation in Iran. To this end, the I-O Table Adjustment Price model in which the imported commodities are classified into intermediate input and final goods is expanded to meet the case in which the value added items are adjusted with respect to some indices. The results show that when due to an increase in exchange rate, all of the value added components do not adjust, the "machine and equipment" group’s products that have the most share of import in goods inputs, have the most price increase. But when all of the value added components adjust, there is no significant difference between price indices of different goods, so all of them have almost equal change with exchange rate variation.

Keywords

References

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Journal of Economic Research (Tahghighat- E- Eghtesadi)
Volume 50, Issue 3 - Serial Number 3
October 2015
Pages 639-658

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History

  • Receive Date: 09 September 2014
  • Revise Date: 02 May 2015
  • Accept Date: 06 October 2015

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