In recent years, severe international sanctions have been imposed on Iran's economy, which has caused instability and increased inflation. Therefore, this study analyzes the time-varying effect of inflation on Iran's future per capita consumption with the WLS-RW approach using monthly data from April 2010 to March 2022 in the period of instability caused by sanctions. The regression results show that the effect of inflation on consumption varies over time, and in some periods the coefficient of inflation on consumption is positive and in other periods it is negative. In addition, in the period of instability caused by the sanctions, this effect reaches about -0.5. Examining the time-varying effect of inflation on consumption reports accurate results. In this study, the variables of GDP per capita, unofficial exchange rate, real interest rate, housing price, and liquidity are also considered control variables. GDP per capita has a positive but fluctuating effect on consumption over time. Although the increase in housing prices helps to increase consumption, the increase in housing prices during the period of instability caused by sanctions causes a sharp decrease in consumption. Exchange rate and liquidity also have a positive effect on consumption at some times and a negative effect at other times. The rolling-window approach provides useful results with a detailed and fact-based examination of the consumption function, considering internal and external fluctuations, especially inflation. Accurate forecasting of per capita consumption is very necessary and important for government officials and policymakers.
Ahmadi Shadmehri, M. T. , Osmani, F. , Salehnia, N. , Cheshomi, A. and Cheshomi, M. (2024). The Time-Varying Effect of Inflation on Consumption During the Period of Instability Caused by Sanctions. Iranian Journal of Economic Studies, 13(1), 87-107. doi: 10.22099/ijes.2025.50022.1959
MLA
Ahmadi Shadmehri, M. T. , , Osmani, F. , , Salehnia, N. , , Cheshomi, A. , and Cheshomi, M. . "The Time-Varying Effect of Inflation on Consumption During the Period of Instability Caused by Sanctions", Iranian Journal of Economic Studies, 13, 1, 2024, 87-107. doi: 10.22099/ijes.2025.50022.1959
HARVARD
Ahmadi Shadmehri, M. T., Osmani, F., Salehnia, N., Cheshomi, A., Cheshomi, M. (2024). 'The Time-Varying Effect of Inflation on Consumption During the Period of Instability Caused by Sanctions', Iranian Journal of Economic Studies, 13(1), pp. 87-107. doi: 10.22099/ijes.2025.50022.1959
CHICAGO
M. T. Ahmadi Shadmehri , F. Osmani , N. Salehnia , A. Cheshomi and M. Cheshomi, "The Time-Varying Effect of Inflation on Consumption During the Period of Instability Caused by Sanctions," Iranian Journal of Economic Studies, 13 1 (2024): 87-107, doi: 10.22099/ijes.2025.50022.1959
VANCOUVER
Ahmadi Shadmehri, M. T., Osmani, F., Salehnia, N., Cheshomi, A., Cheshomi, M. The Time-Varying Effect of Inflation on Consumption During the Period of Instability Caused by Sanctions. Iranian Journal of Economic Studies, 2024; 13(1): 87-107. doi: 10.22099/ijes.2025.50022.1959
)