Volume 28, Issue 1 (Spring 2023)                   JPBUD 2023, 28(1): 31-52 | Back to browse issues page

XML Persian Abstract Print

Download citation:
BibTeX | RIS | EndNote | Medlars | ProCite | Reference Manager | RefWorks
Send citation to:
Motameni M, Zaroki S, Yousefi Barfurushi A. (2023). Testing the Response of the Annual Well-Being Index to Monthly Inflation in Iran: An Application of a Mixed-Data Sampling (MIDAS) Approach. JPBUD. 28(1), 31-52. doi:10.61186/jpbud.28.1.31
URL: http://jpbud.ir/article-1-2161-en.html
Testing the Response of the Annual Well-Being Index to Monthly Inflation in Iran: An Application of a Mixed-Data Sampling (MIDAS) Approach
Mani Motameni 1, Shahryar Zaroki2 , Arman Yousefi Barfurushi3
1- Department of Energy Economy, Faculty of Economics and Administration Sciences, University of Mazandaran, Iran. , m.motameni@umz.ac.ir
2- Department of Energy Economy, Faculty of Economics and Administration Sciences, University of Mazandaran, Iran.
3- Department of Energy Economics, Faculty of Economics and Administration Sciences, University of Mazandaran, Iran
Abstract:   (968 Views)
Curbing inflation is one of the requirements of a good economic policy. The steady rise of inflation can exacerbate poverty and income inequality, and even increase crime. Therefore, various studies have identified inflation as a determinant in reducing economic welfare. Considering that the Iranian economy has experienced high inflation in recent decades, it seems that the welfare of the Iranian population responds quickly to this variable, and reducing the frequency of data may reduce pattern explanation. This study attempts to measure the effect of monthly inflation on economic well-being for the period 1982-2020. Since the index of economic well-being cannot be determined at a frequency higher than annual, it is necessary to employ a mixed-data sampling (MIDAS) approach. Economic growth has been also included in the model as a control variable. The estimation results indicate that inflation has a negative (unfavorable) effect, and economic growth has a positive (favorable) effect on economic well-being. Moreover, the effect of inflation is significantly larger than economic growth. In other words, controlling inflation may have a greater effect on the economic well-being of society in the long term than economic growth.
Keywords: Inflation, Mixed Data, Economic Growth, Economic Well-Being, Iran.
Full-Text [PDF 982 kb]   (281 Downloads)    
Type of Study: Research | Subject: public economics
Received: Nov 09 2022 | Accepted: May 31 2023 | ePublished: Jun 17 2023
References
1. Agrawal, P. (2007). Economic Growth and Poverty Reduction: Evidence from Kazakhstan. Asian Development Review, 24(2), 90-115. [DOI:10.1142/S0116110507500102]
2. Andreou, E., Ghysels, E., & Kourtellos, A. (2010). Regression Models with Mixed Sampling Frequencies. Journal of Econometrics, 158(2), 246-261. [DOI:10.1016/j.jeconom.2010.01.004]
3. Arman Mehr, M., & Farahmandmanesh, A. (2017). Studying the Effect of Price Changes on the Welfare of Urban Households Disaggregated By Income Deciles and Commodity Groups. Economic Modelling, 11(39), 49-74. [In Farsi] [https://eco.firuzkuh.iau.ir/article_600429.html]
4. Bakhtiari, S., & Samad Poor, N. (2011). Estimating the Welfare Cost of Inflation in the Iranian Economy. The Journal of Economic Studies and Policies, 0(19), 3-16. [In Farsi] [https://economic.mofidu.ac.ir/article_26184.html?lang=en] [DOI:10.1111/j.1468-0106.2011.00550.x]
5. Bakhtiari, S., Ranjbar, H., & Ghorbani, S. (2013). Composite Index of Economic Well Being and its Measurement for Selected Developing Countries. Economic Growth and Development Research, 3(9), 58-41. [In Farsi] [https://egdr.journals.pnu.ac.ir/article_222.html?lang=en]
6. Boel, P., & Camera, G. (2011). The Welfare Cost of Inflation in OECD Countries. Macroeconomic Dynamics, 15(S2), 217-251. [DOI:10.1017/S1365100510000507]
7. Braumann, B. (2004). High Inflation and Real Wages. IMF Staff Papers, 51(1), 123-147.
8. Bruno, M., & Easterly, W. (1998). Inflation Crises and Long-Run Growth. Journal of Monetary economics, 41(1), 3-26. [DOI:10.1016/S0304-3932(97)00063-9]
9. Cao, S., Meh, C. A., Ríos-Rull, J.-V., & Terajima, Y. (2021). The Welfare Cost of Inflation Revisited: The Role of Financial Innovation and Household Heterogeneity. Journal of Monetary Economics, 118, 366-380. [DOI:10.1016/j.jmoneco.2020.11.004]
10. Chiu, J., & Molico, M. (2010). Liquidity, Redistribution, and the Welfare Cost of Inflation. Journal of Monetary Economics, 57(4), 428-438. [DOI:10.1016/j.jmoneco.2010.03.004]
11. Dougherty, S. M., & Escobar, O. R. (2019). What Policies to Combat Labour Informality? Evidence from Mexico. Applied Economics, 51(38), 4176-4190. [DOI:10.1080/00036846.2019.1591597]
12. Ghysels, E., Santa-Clara, P., & Valkanov, R. (2006). Predicting Volatility: Getting the Most Out of Return Data Sampled at Different Frequencies. Journal of Econometrics, 131(1-2), 59-95. [DOI:10.1016/j.jeconom.2005.01.004]
13. Ghysels, E., Sinko, A., & Valkanov, R. (2007). MIDAS Regressions: Further Results and New Directions. Econometric Reviews, 26(1), 53-90. [DOI:10.1080/07474930600972467]
14. Gudarzi Farahani, Y., Moshtaridoust, S., & Varmazyari, B. (2011). Consideration of the Welfare Cost of Inflation with General Equilibrium Model Approach. Journal of Monetary and Banking Research, 3(8), 87-120. [In Farsi] [https://jmbr.mbri.ac.ir/article-1-92-en.html]
15. Heer, B., & Süssmuth, B. (2003). Cold Progression and Its Effects on Income Distribution. CESifo Working Paper, No. 951. [DOI:10.2139/ssrn.414043]
16. Hekmati Farid, S., Feizi, S., & Saadat, N. (2016). Effect of Price Changes in Main Commodity Groups on Rural Households Welfare Based on Linear Expenditure System. Economic Modelling, 10(33), 89-106. [In Farsi] [https://eco.firuzkuh.iau.ir/article_580394.html] [DOI:10.1257/aer.p20161097]
17. Khalili Araghi, M., Abbasinejad, H., & Goudarzi Farahani, Y. (2016). Welfare Cost of Inflation in Iran: A DOLS Approach. Economics Research, 16(62), 57-80. [In Farsi] [DOI:10.22054/joer.2016.7022]
18. Law, C.-H., & Soon, S.-V. (2020). The Impact of Inflation on Income Inequality: The Role of Institutional Quality. Applied Economics Letters, 27(21), 1735-1738. [DOI:10.1080/13504851.2020.1717425]
19. Lee, N., & Sissons, P. (2016). Inclusive Growth? The Relationship between Economic Growth and Poverty in British Cities. Environment and Planning A: Economy and Space, 48(11), 2317-2339. [DOI:10.1177/0308518X16656000]
20. Meo, M. S., Khan, V. J., Ibrahim, T. O., Khan, S., Ali, S., & Noor, K. (2018). Asymmetric Impact of Inflation and Unemployment on Poverty in Pakistan: New Evidence from Asymmetric ARDL Cointegration. Asia Pacific Journal of Social Work and Development, 28(4), 295-310. [DOI:10.1080/02185385.2018.1523745]
21. Montero-Moraga, J. M., Benavides, F. G., & Lopez-Ruiz, M. (2020). Association between Informal Employment and Health Status and the Role of the Working Conditions in Spain. International Journal of Health Services, 50(2), 199-208. [DOI:10.1177/0020731419898330] [PMID]
22. Mussurov, A., Sholk, D., & Arabsheibani, G. R. (2019). Informal Employment in Kazakhstan: A Blessing in Disguise? Eurasian Economic Review, 9(2), 267-284. [DOI:10.1007/s40822-018-0117-1]
23. Nunley, J. M., Stern, M. L., Seals, R. A., & Zietz, J. (2016). The Impact of Inflation on Property Crime. Contemporary Economic Policy, 34(3), 483-499. [DOI:10.1111/coep.12156]
24. Osberg, L., & Sharpe, A. (2002). An Index of Economic Well-Being for Selected OECD Countries. Review of Income and Wealth, 48(3), 291-316. [DOI:10.1111/1475-4991.00056]
25. Osberg, L., & Sharpe, A. (2005). How Should we Measure the "Economic" Aspects of Well‐Being? Review of Income and Wealth, 51(2), 311-336. [DOI:10.1111/j.1475-4991.2005.00156.x]
26. Osberg, L., & Sharpe, A. (2009). Measuring Economic Security in Insecure Times: New Perspectives, New Events and the Index of Economic Well-Being. Presented at Canadian Economics Association Annual Conference.
27. Pakdaman, Y., Barkish, A., & Akhavan Arij, M. (2022). Investigating the Asymmetric Effects of Financial Development on Income Inequality in Iran: Using Nonlinear Auto-Regressive Distributed Lag (NARDL) Approach. Planning and Budgeting, 27(2), 127-152. [In Farsi] [http://jpbud.ir/article-1-2059-fa.html] [DOI:10.52547/jpbud.27.2.127]
28. Parkin, M., & Laidler, D. (1975). Inflation: A Survey. Economic Journal, 85(340), 741-809. [DOI:10.2307/2230624]
29. Rosenfeld, R., Vogel, M., & McCuddy, T. (2019). Crime and Inflation in US Cities. Journal of Quantitative Criminology, 35, 195-210. [DOI:10.1007/s10940-018-9377-x]
30. Sadeghi Hasanvand, V., Aminrashti, N., Damankeshideh, M., & Mehrabian, A. (2021). The Effect of Adjusting the Prices of Commodity Groups on the Rural Society with an Emphasis on Welfare Indicators: A Case Study of Iran. The Journal of Economic Policy, 12(24), 139-169. [In Farsi] [http://ep.yazd.ac.ir/article_2081.html?lang=en]
31. Sameti, M., & Izadi, S. (2014). Welfare Costs of Inflation on Different Income Deciles of Isfahan Urban Households. Iranian Journal of Economic Research, 19(59), 117-152. [In Farsi] [https://ijer.atu.ac.ir/article_1414.html]
32. Serletis, A., & Xu, L. (2021). The Welfare Cost of Inflation. Journal of Economic Dynamics and Control, 128(1), 104144. [DOI:10.1016/j.jedc.2021.104144]
33. Serletis, A., & Yavari, K. (2007). On the Welfare Cost of Inflation in Europe. Applied Economics Letters, 14(2), 111-113. [DOI:10.1080/13504850500425949]
34. Shakeri, A., Jahangard, E., & Aghlami, S. (2014). The Nonlinear Effect of Inflation on Income Inequality in Iran. The Economic Research (Sustainable Growth and Development), 13(4), 27-53. [In Farsi] [http://ecor.modares.ac.ir/article-18-3050-fa.html]
35. Tyson, L. (1998). Commentary: How Can Economic Policy Strike a Balance between Economic Efficiency and Income Equality? IUI Working Paper, No. 505.
36. Zaeri, M., & Nadri, K. (2013). Calculation of Welfare Costs of Inflation in Iran. Quarterly Journal of Economic Strategy, 2(4), 39-71. [In Farsi] [https://econrahbord.csr.ir/article_103227.html?lang=en]
37. Zaroki, S., & Ezoji, H. (2018). Fiscal Illusion in Iranian Economy Emphasizing the Five-Dimensional Indicators and the NARDL Approach. Planning and Budgeting, 22(4), 35-80. [In Farsi] [http://jpbud.ir/article-1-1632-fa.html]
Rights and permissions
Creative Commons License This work is licensed under a Creative Commons Attribution 4.0 International License.

© 2024 CC BY-NC 4.0 | Planning and Budgeting

Designed & Developed by : Yektaweb