Vicious Circle of Stagflation in Iran in the Light of Implementing Structural Adjustment Approach

Theoretically, stagflation is considered as an economic and social dilemma which has its root in domestic economic, political and social situations. One of the most challenging issues in studying the causes of stagflation is the role of economic adjustment policies. Using a descriptive-analytical manner, this paper illustrates that implementing structural adjustment policies in the form of shocks to key prices leads to rising inflation and endangering benefits of productive sectors which brings about the weakening of national vigor production and clearly, it has injected vicious circle feature to the stagflation. in doing so, at first, the years which stagflation has been formed in Iran, have been determined and then the process of changing important economic variables such as currency, minimum wage, public sector debt in the banking system, the government budget deficit, liquidity, capital formation, national income, the share of oil revenues, and labor productivity have been compared with the age of stagflation, and their impacts on formation and persistence of this cycles are evaluated according to an institutionalist theoretical model. The result shows that shock-therapies which have been executed in the form of structural adjustment programmes, along with increasing undependability in economy, have decreased the motivation of investigation in productive sections that causes quality growth. In the meanwhile, with extending this vicious circle of stagflation, the economy may experience a more critical condition. The most important suggestions which have been proposed during this article include stability in macroeconomic environment, improved production and business situation, reordering the political structure and institutional changes, elevating the efficiency, and making quality growth.