Causes of Inflation in the Iranian Economy

It is clear that in the nearly last four decades inflation is one of the important problems of Iranian economy. In this study, we determine and analyze the effective factors on inflation in the Islamic Republic of Iran. After briefly reviewing the theoretical background, we use econometric method, such as the Ordinary Least Squares (OLS), to study causes of inflation Iran. Our analysis is based on time series annual data from 1961 to 2005 and our results show that import price index, as well as liquidity, do have positively a significant impact on inflation rates in Iran. Additionally, results show that actual GDP has a negative impact on inflation in Iran.