The Effect of Inflation on Private Investment

Investment is one of the effective factors on economical growth and development. So paying attention to the growth and development of private investment is very important. Inflation is known as the most basic problems over the economic life of the country. Inflation the continuous increase in general level of prices or the continuous decrease in purchasing power of money that would impose great costs on society. It causes the lack of certainty and therefore motivation denial and delay in making decision of investment ,making problem for allocating of resources and has negative influence on the benefits of investment. So in this study the effect of inflation on private investment. The data were collected through library and they were based on time series data taken from central bank and Organization the tax affairs. They were evaluated through a neoclassical investment model and and the effect of explanatory variables on governmental section ,corporate tax ,inflation, interest rate and two dummy variables using the econometrics metoth GMM and software Reviews for the economy of Iran were assessed. The investment in governmental section ,corporate tax, inflation and interest rate had a negative relationship with private investment but facilities, Adjustment policies and Currency reserve fund had positive effects on private investment. Regarding the reverse relationship between investment and inflation and applying effective policies on decreasing inflation that cause encourages of saving and causing motivations for investment, preventing capital escape from production section toward speculative and broker`s activities .