چکیده:
or decades, energy prices have been controlled by the government inIran. This policy had a long lasting impact on almost all economicvariables in Iran. To date, under tremendous pressure to adequately meet the huge domestic demands for energy inputs, the government hasdecided to reduce/eliminate the energy subsidies. Thus, its impact on theconsumer price index is unavoidable. This paper investigates the dynamics of that impact via a dynamic nonlinear inflation model. It isshown that an increasing shock in fuel price has less increasing effect onthe general price index, compared to the steady state effect of a continuously increasing signal. Based on this fact, it is deduced that otherfactors, e.g. the Money Supply Growth and the Goods Market Gap, hasmuch more impact on the inflation. Therefore, unsubsidizing energy price, particularly fuel, will empower the government to save moremoney and avoid expansionary monetary policies. The currency not usedfor subsidizing fuel price can help to decrease the money supply growth, and contribute subsidence of extremely growing inflation due to the money gap.
خلاصه ماشینی:
Investigation on the Impact of an Energy Desubsidization Shock on the General Price Index Via a Nonlinear Inflation Model: Case of Iran Asghar Shahmoradi∗ Hamed Shakouri∗∗ Abstract or decades, energy prices have been controlled by the government inIran.
Keywords: Fuel Prices, Desubsidization, Nonlinear Inflation Model, System Dynamics 1- Introduction For three decades Iranian economy faced the problem of subsidies for the basic goods such as food and energy.
A dynamic nonlinear complex model for inflation of the general price index, which is based on a system approach, is used to study how the government can adjust the fuel price with less shock to the economy.
The proposed model is then explained in the third section, where results of estimation and simulation are obtained describing the dynamic behavior of the inflation caused by a shock into the fuel price index.
History of Inflation in Iran A glance on graph of the historical data of monthly calculated inflation in the general consumer price index (CPI), as Fig 1 shows, promotes such an imagine that it has a chaotic behavior too and may cause the modeling process to be complicated.