The Impact of Demand Shocks on Prices of Manufactured Goods Industries in Iran

In this Paper we have used a Panel Data of two digit ISIC classsification of Large Iranian Manufacturing industried for the period 1373-86 to test the impact of demand shocks on the prices of manufacturd good industries. The result indicate that while positive shocks were effective influencing prices, probably reflecting their flexibility,the negative shocks however, have shown mixes results.While negative shocks lead to the decline of prices in such industries as electirical machinery and transport equipments, other industrial branches ofmanufacturing industries have,however did not respond. Our study also show that while the impact of demand shocks has had asymmetrical impact on industries such as non-metalic minerals, electical machinery and transport equipments, such asymmetry however,has not been realised elsewhere in other manufacturing industries. Finally,our rfinding clearly indicate that the intensity of shocks has not been the same in all branches.