Assessment of the Relationship between Inflation, Exchange Rate, and Economic Growth in Iran: An Application of the Time Series Approach

Mehran Hafezi Birgani¹

1) Assistant Professor, Faculty Member of Accounting and Management, Islamic Azad University of Masjed Soleiman

IOI Code : AZGC-AZKFFB
Publication : 1St International conference on new horizons in management,business, economics and humanities(icmbe.com)
Abstract :
    The primary objective of this study is to evaluate the dynamic relationships among inflation, exchange rate, and economic growth in Iran during the period 1991–2020. Iran, as a developing country with an economy significantly impacted by international sanctions, severe exchange rate fluctuations, and chronic inflation, serves as a prominent case study. Employing the Autoregressive Distributed Lag (ARDL) model and Granger causality test, the findings reveal that inflation and exchange rate volatility have a significant and negative impact on economic growth. Both short-term and long-term analyses indicate that exchange rate shocks and increases in the general price level have led to declines in productivity and investment in the productive sectors. The study suggests that implementing inflation control policies, exchange rate stabilization, and strengthening financial institutions are essential to mitigating the adverse effects of these variables on economic growth

Keywords : inflation exchange rate economic growth iran ardl time series