Estimating the Impact of Banking System Imbalance on Inflation in Iran (Quantile Regression Approach)

Document Type : Scientific paper

Authors

1 razi

2 raze

Abstract

Inflation is one of the economic problems that has affected many countries, including Iran. Inflation causes many social and economic problems, and most economists and politicians are looking for a solution to curb inflation. One of the variables that affects inflation in Iran is liquidity and monetary base. The country's bank balance sheet has been facing a widening imbalance for many years with the banks’ overdrafts from the central bank and the government's budget deficit. Therefore, this research estimates the impact of banks' imbalance on inflation in Iran. This study used the quantile regression model and the statistical data of 1370-1400. The results show that inflation increases with the increase in the growth rate of banks' debt to the central bank, the growth rate of the government's debt to the central bank, and the exchange rate in high and low quantiles because the growth rate of the production gap and financial market openness have a significant negative effect on inflation.

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References

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Macroeconomics Research Letter
Volume 18, Issue 37
December 2023
Pages 93-112

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History

  • Receive Date: 10 November 2023
  • Revise Date: 16 December 2023
  • Accept Date: 25 December 2023

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