World Applied Programming, Vol (3), Issue (8), August 2013.

341-349
ISSN: 2222-2510
2013 WAP journal. www.tijournals.com

Effects of Monetary Policy and Overshooting in

Agricultural Prices in Iran
Amir Dadrasmoghaddam

Seyed Ali Zamaninejad

Department of Agricultural
Economics, Ferdowsi University of
Mashhad, Mashhad, Iran.

Department of Agricultural
Economics, Ferdowsi University of
Mashhad, International Branch,
Mashhad, Iran.
ali.zamaninejad@stu.um.ac.ir

Abstract: In the present study the effects of macroeconomic variables on agricultural relative prices in different
time horizons were studied. Because of monthly time series data (agricultural price index, price index of service
sector, industry price index, price index and exchange rates) during the period April 2002 to end the Persian
date Isfand 2005 has been used and then, the annual time series data (data on price indices in agriculture, nonagricultural price index, interest rate, money supply and interest rates) over the period 1961 to 2004 were used.
The effects of monetary variables on the response rate of prices of agricultural and non-agricultural (industry
and services) than the inflation rate changes were analyzed using regression analysis and mass analysis, our
findings indicate that monetary policy on price index and index price and non-agricultural sector (industry and
services) is effective and money in the long-run neutrality hypothesis is rejected. The results also showed that
short-term agricultural prices relative to non-agricultural sectors are adjusted faster than monetary shocks. The
results for monthly and annual data, which indicate that agricultural prices respond quickly to changes in
inflation is non-agricultural prices respond more quickly.
Keywords: relative price of agriculture, services, industry, overshooting, money supply, interest rates
I.

INTRODUCTION

The agricultural is among the major sectors of Iran's economy and 14 percent value-added benefit is belonging itself [1].
Agricultural sector in the economy in terms of having the capability and capacity is very important and significant role in
supplying food to the people and provide raw materials for some industries, it is noteworthy [2]. The main mission of the
agricultural sector as part of food producers, food needs of the population. But with product development, this could also
provide enough food to meet the economic needs of others is involved. Agricultural sector as one of the major economic
sectors to engage and interact with other sections from other sections affected. Therefore, this policy should be part of
national policies with a view [3]. Such an important topic that is widely used in macroeconomics, the selection of
appropriate policies and tools in order to eliminate imbalances and stabilize the economy. Economic stabilization
policies can be based on their primary effect on the actual demand and actual supply was divided into two groups. The
main purpose of the demand side policies influencing the overall level or growth rate of nominal domestic demand.
These policies may include monetary policy and financial affairs. Supply-side policies tend to increase the volume of
real goods and services supplied by domestic producers of the nominal aggregate demand are there. Monetary and fiscal
policies, the policies that are used in demand management. One of the main tools of monetary and fiscal policies achieve
macroeconomic goals such as equitable distribution of income, increase economic growth, employment, price stability is
[4]. In the other side the importance of food supply in the process of economic development and the role of food prices
in developing countries has always been talk of food security and the relationship between food prices as a key variable
affecting the supply and demand for food and agricultural products has been considered by policymakers. In between on
the one hand the government to provide food security through macro policies such as monetary policies, foreign
exchange trading and other special policies applying to grant subsidies to agriculture and food and agricultural inputs
influences the price and production these products are aimed at achieving food security will intervene in the economy.
Agricultural products and food cost effectiveness of policies to the attention of economists has been used extensively in
economic literature. Prices of agricultural and food products directly through specific policies such as agricultural pricing
policies for agricultural products and food, or indirectly through macro policy is affected. While agricultural products

341

Amir Dadrasmoghaddam and Seyed Ali Zamaninejad. World Applied Programming, Vol (3), No (8), August 2013.

and food prices of industrial products faster reaction to changes in macro variables show [5]. Therefore, given the
decisive role that the price of agricultural products in the food security community, the relationship between
macroeconomic policies, especially monetary policy and price changes of agricultural products is of great importance in
this study it has been. Material was given the title, this study analyzed the relationship between monetary policy and
price changes of is due to agricultural and nonagricultural products. According to the objective, the following hypothesis
can be stated that agricultural prices respond faster to changes in the general price level of response to non-agricultural
prices.
II. METHOD OF RESEARCH
Several studies [6-10] from effects of monetary shocks on prices of various products in the context of macroeconomic
theories have been. The empirical question that is raised is whether this change in the general price level dispersion in
relative price changes are correlated or not, if the data research are static, distribution of price changes between the
different groups and the general rate of inflation is estimated using equation.

RPDt ln pt ln zt t

(1)

RPDt is dispersion measure of price changes among different groups of goods. ln pt is rate of price change. ln zt
are rates the prices of other commodities. Usually by changing the internal market volatility (or standard deviation) in the
relative prices compared to the general price level is:
N

RPDt 1 / N i 1 ( it t )
Where

(2)

t ln pt ln pt 1 is change the rate of supply of goods. it ln pit ln pit 1 is inflation rate for the

period studied, and N is the number of product groups. Although equation 1 is used to estimate the effect of inflation on
relative price distortion. But the relationship of changes in relative prices of a specific commodity group, compared with
other goods not appropriate. As a first step in developing the model is with this aim the model to evaluate the relative
changes of a particular product, suppose there are two goods in the economy:
Agricultural commodities and non-agricultural goods, with follow previous studies in this field [11] and the long-term
linear relationship between the general price level and price of each commodity group, these are stipulated:

ln pta 0 0 ln pt t

(3)

ln ptna 1 1 ln pt t

(4)

Where pt is the general price level.

agricultural goods.

pta are nominal prices of agricultural commodities. ptna is price of non-

pt wa pta w na ptna and

components for each product group.

wa wna 1 that wa and wna are the weights of index

t and t are random component of macroeconomic shocks, including shocks,

especially for each group of goods. With subtracting the equation 3 of 4 obtained with the following equation:

ln pta ln ptna (a0 a1 ) ( 0 1 ) ln pt (t t )

(5)

Equations 3 and 4 or 5 for the neutrality of money and inflation on relative prices in agriculture are used. If
is concluded that in the long run money is neutral. For example [12] showed that

342

0 1 it

0 1 such was the interpretation

Amir Dadrasmoghaddam and Seyed Ali Zamaninejad. World Applied Programming, Vol (3), No (8), August 2013.

that is inconsistent with the evidence in the long run neutrality of money. Prices in order to find relations between
equations 3 and 4 can be rewritten as:

ln pta 0 ln pt a0 t

(6)

na
t

ln p 0 ln pt a1 t

(7)

fractioning equation 6 of 7, the 8 equation is obtained: With

(ln pta 0 ln pt ) (ln ptna 1 ln pt ) ( a0 a1 ) (t t )

Expressions

(8)

t and t to macroeconomic shocks such as, exchange rate and inflation shocks, especially those goods

which are not visible separately:

t 0 0 ln pt 0 ln rt t

(9)

t 1 1 ln pt 1 ln rt t

(10)

The real exchange rate rt and

t and t commodity groups and the specific shocks is invisible:

(ln pta 0 ln pt ) (ln ptna 1 ln pt ) k ln pt ln rt t

(11)

The parameters obtained such that equation 11:

k a0 a1 0 1

0 1
0 1

t t t
The 11 equation stated that the relationship between macroeconomic factors which can be found to offset the price of
agricultural non-agricultural prices in the long-run equilibrium to explain and macroeconomic factors which will
determine the long-term deviation in relative prices.
If agricultural prices higher sensitivity (lower) than the general price level changes relative to non-agricultural prices
have been estimated coefficients positive (negative). If the effective exchange rate is expected to be significant. k is
a constant 12 degrees with respect to the final model:

k (ln ta 0 ln t ) k (ln tna 1 ln t ) k k ln t k ln rt t

(12)

In order to test the basic assumptions, the choice of during the stop is especially important.
If rate if inflation has only short term effects on changes in relative agricultural prices, with increased the lag (k),
significant estimated coefficients vanish. This indicates that the overall price level can explain changes in relative price
changes among different groups of goods are not in the long run. A two-stage method of estimation will be used in
practice, if the data are static, the relationship between the general price level and price level is estimated for each
product group, the estimated coefficients of the first stage and replace it in 12, this relationship is estimated with
different stops.

343

Amir Dadrasmoghaddam and Seyed Ali Zamaninejad. World Applied Programming, Vol (3), No (8), August 2013.

Then follow [14] the effect of monetary policy (money supply and interest rates) on the agricultural price index price
index compared with non-agricultural sector are analyzed. Mutation hypothesis of price data on agricultural price index,
non-agricultural price index, exchange rate, money supply and interest rate (annually) will be studied. If data were not
static and have a group of grade for the unit price of the mutation hypothesis (overshooting) is used mass analysis
Johansen. The mass analysis, it is possible to calculate the speed of adjustment towards long-run equilibrium and it can
be defined how the price of a particular group of goods in the long run finds its overshooting. Collective economic
concept is that two or more variables are linked with each other in time series However, his might be the time series have
been a random process. But over time, follow each other so well that the difference between them is static [13]. Test
group for a two-stage method of Angel and Granger and Johansen and Johansen method is used. Due to a series of
weaknesses in the parasite and Granger two-stage method as possible over a long run equilibrium vector, and Johansen
and Johansen method is used. The study of relationship of mass to the Johansen procedure was used for explanation the
vector of VAR is possible. In practice, when there are k variables in the model of the mass number of vectors (r) will
show r k 1 .
III. RESULTS AND DISCUSSION
In order to determine of estimation appropriate strategy, the study variables were first static test. A variable time series is
valid when the mean, variance, covariance and correlation coefficient that is constant over time. In other words, is
independent of time. In this respect, reliability or non-reliability of time series variables are possible through various
tests. The results of reliability of this study using data from nine stages are presented in Tables 1 and 2.
Table 1. Results of stationary test variables (for monthly data)

Stationary situaition
I(0)
I(0)
I(0)
I(0)
I(0)

Significant level
5%level
1% level
1% level
5%level
5%level

statoinary Status
With T and C
With T and C
With T and C
With T and C
With T and C

Variables
PA(m)
Agricultural prices (monthly)
Ps(m)
Price of service (monthly)
PI(m)
Industry prices (monthly)
CPI(m)
Price index (monthly)
E(m)
Exchange rate (monthly)

Source: Research Findings

Table 2: Results of stationary test variables (for annual data)

Stationary situaition
I(2)
I(2)
I(1)
I(1)
I(1)
I(1)

Significant level
1% level
5%level
1% level
5%level
1% level
1% level

statoinary Status
With T and C
With out T and with C
With T and C
With out T and with C
With T and C
With T and C

Variables
PA
Price index of agricultural
PO
Price index for non-agricultural sector
E
Exchange rate
CPI
Price index
R
Interest rate
RM
Money supply

Source: Research Findings

Because there was a possibility that non-static variables in part be due to structural failure in this part the test was
performed in a structural failure. In this method the subject of structural failure due to static variables examined. The
results showed that variables of (1)I with consideration of structural failure of to become (2)I (Table 3).
Table 3.Results of tests of structural failure
Stationary situation of structural failure

I(1)
I(1)

Critical statistic

-3.81
-4.81

calculated statistics
-5.3
-4.89

Source: Research Findings

344

Variables
PA
Price index of agricultural sector
PO Price of Oil sector

Amir Dadrasmoghaddam and Seyed Ali Zamaninejad. World Applied Programming, Vol (3), No (8), August 2013.

According to reliability test the variable price index in part of agriculture, price index in part of industry, price index
and exchange rates (monthly) levels are static and therefore, using ordinary least squares method, equation 12 to evaluate
the effect of monetary variables on the relative prices of the agricultural sector was estimated at different vectors of time.
In order to determine which macroeconomic factors explains, the diversion of agricultural prices relative to prices in the
long-run equilibrium industry. If agricultural prices have more sensitive to changes in prices for industry in general price
levels, coefficients estimated price index should be positive. Also, if the macroeconomic variables (inflation and
exchange rates) in the relative price changes are affecting agricultural products compared with industrial goods, these
macroeconomic variables have to be able to describe long-term price variations in the balance. On this basis, the results
in Table 4, meaningful statistics of the overall model F show in different vectors of time. The modified R2 for 1,12,24,36
in vectors of time are obtained (0.170 , 0.491, 0.580 and 0.936) respectively, that with increasing the rate of vectors of
time, the value of model will be increase. The increasing of the rate of interruption statistic in Watson camera shows the
absence of solidarity. For changes in relative prices for agricultural products were analyzed in four different time
horizon. Based on the results in Table 4, the coefficients estimated overall price index at different time horizons
(1,12,24,36) are obtained (0.479 , 0. 231, 0.103 , 0.140) respectively, and only a short time horizon k=1, the relationship
is positive and significant at 1% level. This means that in the short time horizon, prices of industrial goods and
agricultural products have more sensitive to price changes in the general price level. Also, these results indicate that the
research has been hypothesized that in short-term response to changes in prices of agricultural products in the general
price level is faster from response than non-agricultural prices. The mark of exchange rate in stop 1 is 1% level and all
coefficients are negative and significant. Exchange rate implies a negative sign in the time horizon over increasing of
rates lead to lower prices of agricultural products in comparison of is higher than the price of industrial goods. Estimated
exchange rate coefficients at different time horizons (1, 12, 24, 36) are obtained, (-1.600, -1.539 , -2.394 and- 4.766),
respectively, and all coefficients are significant and negative. With increasing time horizon in the long-run equilibrium,
the exchange rate coefficients are larger and indicate that exchange rate changes than prices of agricultural products in
the industrial sector is an effective long-term time horizon. According to the findings of this study monetary variables on
the relative prices of agricultural sector is more effective at different time horizons.
Also, based on the reliability test variables such as agricultural price index, service price index, price index and exchange
rates (monthly) are also in the static level and therefore, using ordinary least squares method in equation 12 to evaluate
the effect of monetary variables on the relative prices of agricultural, in comparison with the service sector was estimated
at different time horizons for determination that which variables of macroeconomic explains the deviation of agricultural
prices in the long-run equilibrium price comparison service. If agricultural prices have more sensitive to changes in
prices for industry in general price levels, coefficients estimated price index should be positive. Also, if the
macroeconomic variables (inflation and exchange rates) in the relative price changes are affecting agricultural products
compared with industrial goods, these macroeconomic variables have to be able to describe long-term price variations in
the balance. On this basis, the results in Table 5, meaningful statistics of the overall model F show in different vectors of
time. The modified R2 for (1,12,24,36) in vectors of time are obtained (0.030 , 0.103, 0.150 and 0.723) respectively.The
statistic in Watson camera shows the absence of solidarity. For changes in relative prices for agricultural products were
analyzed in four different time horizon. Based on the results in Table 3, the coefficients estimated overall price index at
different time horizons (1,12,24,36) are obtained (0.457 , 1.093, 1.383 , 4.688) respectively, that there is a positive and
significant relationship between general level of prices and changes prices of agricultural goods in comparison of
services products. Also, these results indicate that the research has been hypothesized that in short-term response to
changes in prices of agricultural products in the general price level is faster from response than non-agricultural prices.
The mark of exchange rate in stop 1 is 1% level and all coefficients are negative and significant. Estimated coefficients
of money rate at different time horizon is k=1 , -1.524 ant the exchange rate in degree stop is 1 and in 1 level is positive
and significant. The exchange rate at different time horizons (12,24,36) are obtained, (-3.521 ,-4.631 and -16.461),
respectively, that in 5% level confirms significant negative correlation between exchange rate changes and price changes
of agricultural products compared with the service department.These results indicate that exchange rate implies a
negative sign in the time horizon over increasing of rates lead to lower prices of agricultural products in comparison of
is higher than the price of industrial goods. Overall, these results indicate that the price index of service sector is more
stable compared with the agricultural sector and relative price distortions caused by monetary policy on the agricultural
sector towards the service sector more and changes in macroeconomic variables (inflation and exchange rates) is
effective on changes in relative prices of agricultural services.

345

Amir Dadrasmoghaddam and Seyed Ali Zamaninejad. World Applied Programming, Vol (3), No (8), August 2013.

Table4. The results of estimating the effect of monetary variables on the relative price of agricultural against industry.

K=36

K=24

K=12

K=1

Variables

42.59***
0.140
-4.766***
1.562

21.178**
0.103
-2.394*
0.445

12.654***
0.231
-1.539**
0.554

11.380***
0.479***
-1.600***
0.554

0.936

0.580

0.491

0.170

R2

82.760

16.927

17.908

5.829

Intercept
Price index
Exchange rate

C
CPI(m)
E(m)
D.W

Source: research findings *, ** and *** respectively significant at 10, 5 and 1 percent
K:order lag

Table5. The results of estimating the effect of monetary variables on the relative price of agricultural against service

K=36

K=24

K=12

K=1

Variables

123.07***
4.668**
-16.461**
2.261

34.228**
1.383*
-4.631**
1.338

25.770**
1.093**
-3.521**
0.759

12.713**
0.457*
-1.524*
0.857

0.723

0.150

0.103

0.030

R2

15.424

3.040

3.012

1.743

Intercept
Price index
Exchange rate

C
CPI(m)
E(m)
D.W

Source: research findings *, ** and *** respectively significant at 10, 5 and 1 percent
K:order lag

The annual data using vector error correction model was estimated model. Given that the annual data for the effect of
monetary variables on the relative prices of agricultural and the survey of quickly react prices of agricultural and non
agricultural in comparison of changes in monetary policies between agricultural and non-agricultural sector were not
static and they are (1)I, The mass analysis was used for this purpose. According to the results of Table 6, hypothesis (r =
0) is rejected. Similarly, there is a vector of mass hypotheses, the two vectors together and more were analyzed. As seen
in table 3, according to test of maximum special value and the effect of 5 mass vector can be selected.
Table 6. Cointegration Rank Test Results

H0

H1

Max-Eigen Statistic
non
r=0
r <=1
r <= 2
r <= 3
r <= 4

Critical Value

389.2606
189.4228
114.3426
48.6019
21.7921
2.8298

95.7536
69.8188
47.8561
29.7970
15.4947
3.8414

Accounting statics

Critical Value

199.8378
75.0801
65.7406
26.8098
18.8922
2.8998

40.0775
33.8768
27.5843
21.1316
14.2646
3.8414

r=0
r=1
r=2
r=3
r=4
r=5

Trace Statistic
non
r=0
r <=1
r <= 2
r <= 3
r <= 4

Accounting statics

r=0
r=1
r=2
r=3
r=4
r=5

Source: Research Findings

346

Amir Dadrasmoghaddam and Seyed Ali Zamaninejad. World Applied Programming, Vol (3), No (8), August 2013.

According to Johansen tests in Table 6, there are five vector mass. According to Table 7, the first vector of the money
supply in the wholesale price index of agricultural products is positive and significant relationship. The second vector,
the supply of money for non-agricultural products with wholesale price index is positive and significant relationship. The
third vector of the total money supply, index of wholesale prices is positive and significant relationship. The fourth
vector is having a significant positive relationship between money supply and exchange rates. Money supply were all
negative and significant coefficients of expansion and support of this theory that monetary policy has a positive effect
on prices. Increase in money supply leads to price increases in the prices of agricultural products and non-agricultural
products, price index, exchange rates and interest rates. That the money in the long-run neutrality hypothesis is rejected.
Table 7. Normalized cointegrating coefficients

Vector error
correction 5
0
0
0
0
1
-.0290***
-472.429

Vector error
correction 4
0
0
0
1
0
-.0036*
-38.9305

Vector error
correction 3
0
0
1
0
0
-.0347***
393.0564

Vector error
correction 2
0
1
0
0
0
-.0887***
1181.624

Vector error
correction 1
1
0
0
0
0
0.0036***
-88.8101

variable
PA
PI
PP
E
R
M
C

*** denotes 1% significance level,** denotes 5% significance level and,* denotes 10% significance level
Source: Research Findings

According to the results in Table 7, the coefficient vector error correction is called adjustment speed. Prices of
agricultural products in the course of its long-run equilibrium price jumps (Overshooting) are found and should therefore
be negative in the long run, this process was estimated. Given that the agricultural sector prices are flexible, so should
the relevant parameters of the non-agricultural sector is larger.
According to table 7, the speed of adjustment towards long-run equilibrium price of agricultural products, prices of
agricultural products, the overall wholesale price index, exchange rates and interest rates have been obtained, ( -1.1688, 0.3411, -1.3054, -0.9494, - 0.4320) ,respectively, that the coefficients are negative. Worth the price of some agricultural
products to non-agricultural sector is larger than the results are consistent with theoretical research.
Table8. Vector error correction model coefficients and diagnostic tests

D(PA)

D(PN)

D(CPI)

D(E)

D(R)

D(M)

-1.1668

0.0569

-0.8862

-2.6192

0.8301

-51.56763

[-0.9315]

[0.0142]

[-0.6841]

[-1.2557]

[2.2164]

0.8282

-0.3411

0.7057

-1.3626

0.1861

-161.941

[1.5904]

[-0.2053]

[1.3161]

[-1.5434]

[-1.2005]

[-3.4706]

1.6849

0.3290

-1.3054

2.3177

-1.0832

334.5648

[0.9542]

[0.0580]

[-0.7133]

[0.7865]

[-2.0475]

[2.1009]

0.1175

-0.0327

0.3790

-0.9494

-0.8205

-101.89

[1.0381]
1.0381
[1.8473]
-0.4967
[-0.1785]

[-0.0092]
-0.6855
[-0.3799]
1.2641
[0.1415]

[0.3308]
0.9668
[1.6599]
0.1437
[-0.0498]

[-0.5145]
-0.8563
[-0.9130]
4.5118
[0.9718]

[-2.4768]
-0.4320
[-2.5657]
-2.3037
[-2.7634]

[-1.1144]
-101.89
[-2.0102]
186.2355
[0.7422]

347

[-0.4584]

Error Correction:
Coint.Eq1

Coint.Eq2

Coint.Eq3

Coint.Eq4
Coint.Eq5

Apt 1

Amir Dadrasmoghaddam and Seyed Ali Zamaninejad. World Applied Programming, Vol (3), No (8), August 2013.

D(PA)

D(PN)

D(CPI)

D(E)

D(R)

D(M)

-2.5899
[-1.0923]
-2.5157
[-1.3253]
0.5592
[-1.5039]
-0.2627
[-0.4448]
-1.152
[-3.1710]
2.6761

-0.4839
[-0.0635]
-0.4427
[-0.0724]
0.0151
[0.0125]
-0.5674
[-0.2991]
-2.3557
[-2.0178]
1.7603

-2.6260
[-1.0686]
-3.0799
[-1.5655]
-0.3152
[-0.8180]
-0.2895
[-0.4728]
-1.0447
[-2.7728]
2.0422

2.6208
[0.6623]
0.8784
[0.2773]
1.8663
[1.7510]
1.8850
[1.9120]
0.3677
[0.6061]
-3.3221

-1.7222
[-2.4240]
-1.5891
[2.7948]
-0.0604
[-0.5426]
-0.333
[-1.9000]
0.2783
[2.5552]
2.1959

170.9018
[0.7992]
145.7114
[0.8511]
139.6836
[4.1649]
125.3035
[2.3518]
130.9296
[3.9931]
-357.217

[0.8426]

[0.1726]

[0.6204]

[0.6267]

[2.3073]

[-1.247]

2.5670
[1.1664]
3.0677
[1.8341]
0.3766
[0.3487]
0.9658
[1.2596]
-1.1020
[-0.1198]
0.2989
[0.3464]
-1.3451
[-2.2819]
0.1414
[-0.2192]
0.0189
[-1.0820]
-0.0096
[0.5562]
-0.0033
[-0.3708]
80.106
[1.1712]
0.9988

0.2147
[0.0303]
3.0813
[0.5737]
-1.0031
[-0.2892]
2.0661
[-0.8391]
-1.9981
[-0.7307]
-2.1080
[-0.797]
0.9430
[0.4982]
-2.4613
[-1.1880]
0.0208
[0.5141]
0.0118
[0.2128]
0.0022
[0.0769]
-43.036
[-0.1959]
0.9964

2.1499
[0.9425]
3.2652
[1.8836]
0.2562
[0.2289]
0.7611
[0.9578]
0.0005
[0.0005]
0.3526
[0.3944]
-1.5302
[-2.5048]
0.2342
[0.3538]
-0.0102
[-0.5651]
-0.0056
[-0.3137]
-0.0053
[-0.5818]
68.0582
[0.9601]
0.9988

-1.5368
[-0.4184]
0.9553
[0.3422]
0.0273
[0.0151]
0.9693
[0.7575]
-0.1004
[-0.0707]
1.9993
[1.3886]
-0.1952
[-0.1984]
1.8364
[1.7056]
-0.0334
[1.1463]
-0.0361
[-1.2544]
-0.0115
[-0.7783]
13.0543
[0.1143]
0.9935

1.2311
[1.8668]
1.1719
[2.3383]
0.7072
[2.1852]
0.5752
[2.5038]
0.6943
[2.7214]
-0.1236
[-0.4767]
-0.3080
[-1.7438]
0.0093
[-0.0481]
-0.0095
[-1.8291]
-0.0081
[-1.5746]
-0.0052
[-1.9591
50.8899
[2.4831]
0.8659

-287.259
[-1.4467]
-185.175
[-1.2275]
42.2655
[0.4339]
-3.4109
[0.0493]
-7.2438
[-0.0943]
-18.1156
[0.2328]
75.6963
[1.4238]
-47.7791
[-0.8211]
0.0238
[0.0151]
-0.5592
[-0.3591]
-1.8635
[-2.3193]
4171.69
[0.6763]
0.9995

0.9967
5.0307
6.0756
488.3032

0.9900
7.3640
8.4090
156.9593

0.9969
5.1022
6.1472
512.2193

0.9820
6.0550
7.0999
86.4455

0.6288
2.6204
3.6654
3.6521

0.9988
14.0345
15.0795
1397.835

Error Correction:

Apt 2
Apt 3

OPt 1
OPt 2

OPt 3

CPI t 1
CPI t 2
CPI t 3
Et 1
E t 2
E t 3

Rt 1
Rt 2
R

t3

M t 1
M t 2

M t 3
c

R2
R2
AIC
SBC
F

t-statistics in brackets
Note: ***1% significance level, **5% significance level, ***10% significance level

Variables PA, PN, CPI, E, R, M, respectively, the price index for agricultural, non-agricultural price index, consumer
price index, exchange rates, interest rates and the money supply. The numbers in square brackets are significant statistic
of t.

348

Amir Dadrasmoghaddam and Seyed Ali Zamaninejad. World Applied Programming, Vol (3), No (8), August 2013.

1.

IV. CONCLUSIONS AND SUGGESTIONS

The results showed that monetary policy on agricultural price index compared with non-agricultural sector is more
effective than non-agricultural and agricultural product prices faster than monetary shocks affected. These findings
indicate that the agricultural sector will benefit from further optimization of macro policies and macroeconomic.

2.

Long-term strategies and short-term pricing policy for agricultural products should be according to the criteria of trade
between agricultural products and trade relationship between agriculture and other economic sectors to be determined.

3.

The evidence shows that monetary policy on price indices in agriculture, industry, oil and effective services and
agricultural prices and oil industry than to monetary shocks are quickly adjusted. These findings strongly support
that monetary stabilization policies lead to less uniformity of prices and price variations in the economic sectors are
the sectors of economy.

4.

One reason inflation in Iran may be of money supply growth. Thus, one of the essential measures to eliminate
inflation, is for using of Contractionary Monetary Policies. Since one of the major causes of inflation, there is a
supply-side shocks that occur from changes in exchange rates, therefore it is necessary to stabilize the exchange rate
policy continues to be applied and the irregular publication of the money will stop.

5.

The results showed that the shocks from inflation, the price index of industry and services has caused prices to rise
upward trend in the agricultural sector to the detriment of the agricultural sector. The price of agricultural support
policies should be coordinated with other policies in the sector.

6.

Because the money directly and indirectly on the price trend of the economy is efficient, thus, monetary policy must
be consistent with the policies of economic sectors including agriculture occur. From Contractionary monetary
policy to reduce the amount of money can be used. It should be noted that the anti-inflationary effects of inflation
and growth (decline) of Irans economy during a period of not dumping money in pension effects persist for several
periods. Therefore, it may be cause instability in the effects of monetary policy .Due to the use of monetary policy
should be the maximum precision and caution.

7.

Also it seems that future research with greater macro-economic variables and for longer periods of monetary policy
on prices of agricultural products takes place.
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