Identification and Analyzing Of Effective Factors Elastics on Inflation Function in Iran by Using ARDL Methodology

Abstract

we estimated the function of inflation for the period
(1971-2009) by using the autoregressive distributed lag (ARDL)
method. In addition, we used the error correction model and
stability tests. According to our findings, the explanatory
variables include gross domestic production, saving, government
expenditure, liquidity and import. The results show that there is
a long-run equilibrium relationship between the variables.
According to our findings, the liquidity and government
expenditure have positive impact on the inflation and gross
domestic production; saving and import have insignificant
negative effects on the inflation in Iran. The Error Correction
Model (ECM) is about 73 percent, which indicates amount
deviation of equilibrium. Furthermore, the stability tests show if
the inflation function is stable, therefore the two tests confirm
that the stability of the inflation function is existent.