Analysis of the Effects of Relative Price Changes as Supply Shocks on Inflation in Iran

Abstract

This paper analyses the effects of relative price changes dispersion and skewness as aggregate supply shocks on inflation in iran. For this purpose, we used total and state urban price index, for period 2004-2012 and arellano and bover (1995), Blundell and Bond (1998) method. The results show that relative price changes dispersion and skewness have positive and significant effect on inflation. In addition, the interaction between the dispersion and skewness has negative effect on inflation.