Inflation, Barrier or Motive of the Economic Growth; Some Evidence on Iranian Economy: An Emphasis on Oil Shocks

Understanding the kind and degree of inflation's influence on economic growth is one of the most important issues in economic policy-making sphere. According to theoretical arguments, there is a kind of ambiguity about inflation influence on economic growth but it seems that the literature about negative relation between these two important macroeconomics variables is stronger and widespread. In this article, I discuss about inflation's influence on Iranian economic growth. The main characteristics of the article from empirical standpoint are differentiating between oil economic growth and non-oil economic growth and separating implication of oil price shock on economic growth in 1352 and 1358. According to the findings of this survey during the period of 1345-84, although inflation has negative influence on economic growth but there is positive and meaningful relations between inflation and non-oil economic growth. According to these findings, increasing 10% in inflation rate decreases 3 % of oil economic growth, but this rate of inflation increases 0.05% in non-oil economic growth. Another point is that these two oil shocks have negative influence on economic growth.