The Impact of Inflation Volatility on Growth of Economic Sections of Iran

Abstract

Inflation volatility is recognized as one of the most important issues concerning Iran’s economy which due to the lack of stability has contributed to an output decline in recent years. The present research surveys the impact of inflation volatility on growth of economic sections of Iran from 1973 to 2013. This research was benefited from Solow–Swan exogenous growth model, ARCH and GARCH. The data was analyzed and estimated by computer software Microfit via ARDL method. The results indicated that inflation volatility has had a negative impact on growth of Iran’s economic sections’ (agriculture, industry and services) value added, i.e. it leads to declined growth in these sections.