TY - JOUR ID - 83453 TI - Regional and Global Drivers of Iran’s Inflation: Evidence from a GVAR Model Featuring a Dominant Unit JO - Iranian Economic Review JA - IER LA - en SN - 1026-6542 AU - Hajamini, Mehdi AU - Seyyed Hosseini, Seyyed Mohammad AD - Department of Economics, Yazd University, Yazd, Iran AD - Department of Economics, Ferdowsi University of Mashhad, Mashhad, Iran Y1 - 2021 PY - 2021 VL - 25 IS - 2 SP - 305 EP - 321 KW - Iran’s Inflation KW - Spillover effect KW - Global VAR KW - Dominant Unit KW - Variance Decomposition DO - 10.22059/ier.2021.83453 N2 - Increasing international interdependence leads to a higher degree of inflation vulnerability to foreign and global shocks. In this regard, inflation management is one of the most important challenges various countries are facing in the global economy. The present paper aimed to examine the regional and global origins of inflation in Iran. A GVAR model featuring a dominant unit was estimated for 34 countries during 1988Q4-2016Q4. The findings indicated that Iran’s inflation is directly and positively affected by oil and food price shocks in both the short and long-run. Furthermore, there are relatively strong spillover effects, and hence inflationary pressures are exacerbated due to the higher inflation rates of Iran’s trading partners. Almost 21 percent of Iran’s inflation changes are explained by foreign shocks. About 8 percent are attributed to the inflation of Iran’s trading partners that one-third of this contribution is related to China and India, and one-fourth to Latin America and Turkey. The findings reveal that Iran’s economy has a high degree of vulnerability to regional and global shocks. UR - https://ier.ut.ac.ir/article_83453.html L1 - https://ier.ut.ac.ir/article_83453_075f1547e1b0b1730d81095af82cb311.pdf ER -