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Does Producer Price Index Lead Consumer Price Index? (in Persian)

Author

Listed:
  • Barakchian, Mahdi

    (Iran)

  • bayat, saeed

    (Iran)

  • Karami, Hooman

    (Iran)

Abstract

Many Iranian economists believe that producer price index (PPI) inflation lead consumer price index (CPI) inflation. Based on this hypothesis, increasing (decreasing) in PPI inflation is a signal for future increasing (decreasing) in CPI inflation. Using CPI and PPI sub components, this paper tests the abovementioned hypothesis. 359 sub components of consumer basket and 751 sub components of producer basket during 1383 to 1392 are information used in calculations. The results show that PPI inflation does not lead CPI inflation, but by eliminating the common sub components between CPI and PPI from PPI components and reconstructing PPI, we see that reconstructed PPI inflation can lead CPI inflation both in long and short run

Suggested Citation

  • Barakchian, Mahdi & bayat, saeed & Karami, Hooman, 2016. "Does Producer Price Index Lead Consumer Price Index? (in Persian)," Journal of Monetary and Banking Research (فصلنامه پژوهش‌های پولی-بانکی), Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 8(26), pages 521-541, January.
    • Handle: RePEc:mbr:jmbres:v:8:y:2016:i:26:p:521-541
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    More about this item

    JEL classification:

    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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