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Output-Inflation Trade-off in the Economy of Iran

Eslami, Keyvan | 2011

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  1. Type of Document: M.Sc. Thesis
  2. Language: Farsi
  3. Document No: 41712 (44)
  4. University: Sharif University of Technology
  5. Department: Management and Economics
  6. Advisor(s): Nili, Masoud; Barakchian, Mehdi
  7. Abstract:
  8. e main purpose of this resear is to provide an estimate of the short-run slope of the Phillips curve (or the output-inflation trade-off) in Iran. e subject is important, first, because, it reveals the relation between the real and the nominal sectors of economy, and second, because, it has crucial policy implications. We especially investigate whether this relationship has anged during the last five decades following the anges in economic environment and structure. Our findings represent a strong relationship between the real output and the nominal demand before the ’s. is connection, however, starts weakening at the beginning of the ’s, and almost diminishes aer the ’s. As one of the main contributions of our resear, we have examined the sources of real-nominal relationships based on relevant economic theories. Economic theories provide two major views about nominal-real relationship, namely, imperfect information, and menu costs. Puing our model on these two bases, we can conclude why the short-run slope of the Phillips curve has anged during the resear period of our study. e findings of the current resear indicate that the main element in the decline of the trade-off parameter, in the beginning of the ’s, was imperfect information, whereas the meanism of the price stiiness used to play an influential role in the sharp decrease of the Phillips curve slope in the early ’s
  9. Keywords:
  10. Imperfect Information ; Price Stickiness ; Menu Costs ; Phillips Curve ; Structural Break ; Business Cycle Persistence

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