An Investingation of the Impact of Macroeconomic Variables on Food Price Index in Iran (1959-2000), An Autoregressive Distributed Lag Approach

The purpose of this paper is to study the impact of macroeconomic variables on food price index in the Iranian economy for the period 1959-2000. An auto-regressive distributed lag (ARDL) model is used for this purpose. The results indicate that monetary expansion and the depreciation of real exchange rate have a positive impact on food price index but an increase in the degree of openness of the economy will reduce food prices with no determinate relationship between food price index and food production and per capital income in the long run. Except for the relationship between food production and food price index which is negative in the short run, the results are similar to that of the long run. The error correction model is indicative of a relatively rapid adjustment of short run disequilibrium towards the long run equilibrium.