Volume 3, Issue 8 (6-2012)                   jemr 2012, 3(8): 141-158 | Back to browse issues page

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arman S A, Mirabizadeh M. Analyzing the Asymmetric Effects of Inflation on Real Investment in Iran. jemr 2012; 3 (8) :141-158
URL: http://jemr.khu.ac.ir/article-1-345-en.html
1- Shahid Chamran University Ahvaz
2- Teacher of Payamenoor University , masume_mirabi@yahoo.com
Abstract:   (9638 Views)

  The purpose of this paper is to analyze the effects of inflation on real investment in Iran. After briefly reviewing the investment theories and their situation in Iran, we consider the determinants of investment by using annual data (1958-2009).

  Results of the Augmented Dickey- Fuller (ADF) test indicate that all of the variables appearing in model are I(1). So, the results of the threshold regression model indicate that real GDP, the trade openness index and inflation rate can influence investment.

Results also show that the effect of inflation on investment follows an asymmetric adjustment process. The threshold level for the rate of inflation has been estimated 11.9 percent. If the annual rate of inflation exceeds this threshold level, it will have a negative impact on investment. But, if inflation remains below this level, not only the negative effect fades away but also rising prices can boost investment.

Full-Text [PDF 616 kb]   (2223 Downloads)    
Type of Study: بنیادی | Subject: پولی و مالی
Received: 2011/11/26 | Accepted: 2012/09/2 | Published: 2012/09/15

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