Date of Award:

5-1983

Document Type:

Dissertation

Degree Name:

Doctor of Philosophy (PhD)

Department:

Economics and Finance

Department name when degree awarded

Economics

Committee Chair(s)

Basudeb Biswas

Committee

Basudeb Biswas

Committee

Jay C. Andersen

Committee

Philip R. Swensen

Abstract

The main purpose of this study is to analyze theoretically and empirically the short- run dynamics of Iranian reserve flows, black market exchange rate, and domestic rate of inflation. To achieve this purpose, a monetary approach was adopted to measure the simultaneous effect of an ex ante excess flow supply of money on the three variables.

This study also attempts to test the hypothesis that in the long run growth in output and price level is associated with a balance of payments surplus, while growth in the domestically - determined portion of the money stock tends to be associated with deficits. The empirical findings for the longrun balance of payments shows that monetary authorities in Iran cannot control the change in the stock of international reserves through domestic credit creation or destruction; rather, the authorities have a substantial control over this variable through the money supply multiplier. In the short run, monetary imbalances do explain the flow of international reserves, whereas, domestic inflation is mainly explained by world inflation. However, changes in the black market exchange rate are solely determined by factors outside of the model.

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