The proposal of 13 solutions to curb inflation/monetary discipline and increase the independence of the central bank is the means of reducing inflation
Mohammad Hassan Sabouri Deilmi, in an interview with the economic reporter of Fars News Agency, said: “Inflation and rising prices represent the economic situation of the country, which has not experienced favorable conditions in the past years, so it should be seriously considered by policymakers.” and be involved in the affairs of the country.
This economic expert added: In addition to reducing the purchasing power of households, inflation causes the country’s economy to face many problems by creating an atmosphere of uncertainty and instability, so that the continuous increase in prices causes a decrease in trust in the society of economic policy makers. and this issue has many social consequences.
* Inflation is a legacy of the past that has been transferred from one government to another
Stating that we have always faced the issue of inflation in our country and inflation in our country has been transferred from one government to another, he said: Therefore, according to the history of inflation in the country, my interpretation of this issue is that inflation is the legacy of our predecessors. And therefore, to control it, a series of conditions and in other words dos and don’ts are necessary.
* Examining the opinions of three views about the roots and factors affecting inflation
Pointing out that cost pressure, demand elasticity and structural problems are known as the main causes of inflation in economic books, Sabouri stated: The fans of classical, monetary and Keynesian schools say that the main reason for inflation is demand elasticity, but since demand The economy is related to the two markets of money and goods. These schools believe that the pressures caused by the elasticity of demand in the goods market and the changes in the variables of the money market through the creation of elasticity of demand will lead to this type of inflation. Therefore, the solution to deal with inflation in these views is to adopt contractionary financial policies, including increasing tax rates, reducing government spending, and limiting the increase in money supply.
This economic expert stated: In another point of view, the increase in the production costs of companies is considered as the main reason for inflation, as well as things such as the increase in the wages of the labor force in proportion to the increase in productivity, the increase in the price of inputs and raw materials, etc. as the main reasons for the increase in the price level. are called
He stated: In another point of view, while considering the role of money, elasticity of demand and increase in costs in causing inflation, other causes are also proposed as causes of inflationary waves.
Sabouri Dilmi stated: The supporters of this attitude are of the opinion that some structural and institutional factors such as low productivity in various economic sectors, low degree of competition and freedom of trade and creation of monopoly in some sectors, low flexibility of total production, increase The share of the non-productive sector in the economy and cost structure has increased, the dependence of a significant part of domestic production on imports (intermediate and capital goods), the low share of research and innovation in domestic production, etc. Rather, along with demand elasticity and cost pressure, it increases inflationary dynamics and makes it harder to deal with it.
Sabouri Dilmi said: The formation of inflationary expectations is also known as one of the main and important reasons for the creation and continuation of inflationary conditions. But considering that inflationary expectations appear in the form of excess demand or cost pressures. It is not placed in a separate category and is discussed in the analyzes related to inflation caused by increased demand and inflation caused by cost pressure.
* Inflation in Iran is a multifaceted problem
This economic expert stated: Therefore, the examination of the inflationary structure as well as the change process of the involved variables based on each of the mentioned points of view, shows that currently the problem of inflation in Iran is visible as a multifaceted problem. The formation and creation of the current inflationary environment is the result of demand elasticity, cost pressure and the existence of structural problems that exacerbate inflation in the country’s economy. Because on the one hand, we have witnessed financial indiscipline for many years, including annual budget deficits, the formation of financial domineering behaviors, followed by monetary indiscipline, including an excessive increase in liquidity level, and on the other hand, an increase in costs related to production in companies, such as the cost of supplying raw materials. And imported intermediate goods have become a fixed assumption for investors and owners of production enterprises due to the increase in exchange rates, increase in annual wages, increase in costs related to energy carriers and other things.
This economic expert stated: All the things that were stated as structural reasons for inflation can be seen more or less in the Iranian economy. In the end, the combination and convergence of all these cases has led to the potential formation of inflationary expectations among economic agents, and in this situation, small changes in any of the mentioned variables are accompanied by significant and sometimes long-term inflationary waves.
This economic expert stated: Therefore, we must accept that the country’s economy is in a very special situation and the complexities of the current situation have made it difficult and costly to take some corrective decisions.
Sabouri stated: Of course, with a short-term and hedonistic view, it is possible to artificially hide some of the existing problems by increasing oil sales and injecting oil revenues into the economy, but experience shows that this approach is a temporary and short-term solution and in the long-term In addition to aggravating the problems, it has many destructive economic effects.
He pointed to the necessity of designing and implementing an inflation control policy package and said: it is necessary to support this issue in a special way and with the cooperation and coordination of all governing bodies, institutions and institutions.
This economic expert stated: It is necessary to design and implement an inflation control policy package with the aim of division of labor and creating greater coordination between the relevant institutions and institutions, this policy package contains solutions to confront and control the existing inflationary trend and prevent the creation of new inflationary waves based on each It will be one of the sources of creating inflationary waves.
* Proposing 13 strategies to curb inflation to the government
This economic expert said: The topics mentioned in this interview under the title of methods and solutions to control inflation, I had previously mentioned in an interview I had in Fars news agency, in that interview, 13 ways and solutions to control inflation and prevent the creation of a wave. I mentioned its new features, and I will mention the same things here as a reminder.
Referring to the naming of this year by the Supreme Leader of the Revolution as “inflation control, production growth”, he said: In the field of inflation control, I think the government can follow several methods, which I will briefly mention.
This economic expert stated: One of the ways to curb inflation is to adopt appropriate measures in line with monetary discipline and prevent the irrational increase of monetary variables in line with inflation targeting.
He stated: The next way of planning is to continuously reduce the government budget deficit, reduce the debt of the government sectors to the central bank, increase the independence of the central bank and reduce the financial dominance of the government over the central bank (in a specific and targeted period of time).
Sabouri Dilami stated: The third way is the government’s adherence to financial discipline and the implementation of construction, development and infrastructure projects using the capacities of government institutions, large private sector companies and banks; Regarding non-profit plans and projects or those with little economic justification, it is necessary to provide some incentive packages, such as handing over the right to exploit mines and considering some economic benefits that exist at the place of implementation of the plans, etc., to encourage the private sector to participate and invest in these plans. did
He added: The next way for the government to curb inflation is to take necessary measures to increase the government’s tax revenues by using the revenues from new bases and reducing tax evasions in order to achieve stable levels of tax revenues.
Sabouri Dilmi said: reducing the share of the sale of government bonds and assets to finance the current budget and the requirement to provide these resources from the income from the collected taxes can be considered as the next solution and way to control inflation.
He stated: The next method that the government can use to curb inflation is to oblige government agencies and companies to increase productivity and in return to give some awards and bonuses to employees working in these sectors from the savings resulting from increased productivity.
This economic expert added: moving in the direction of reducing the total price of the products produced by domestic enterprises through the use of maximum production capacities (economies of scale), expansion of economic diplomacy and market making and market development of the products of these enterprises, deepening of domestic financial markets and the use of tools New financial (financial derivatives) with the aim of reassuring business owners to sell manufactured products is another way to curb inflation.
He added: The government’s next solution to curb inflation is to reform the pricing system and determine the price of goods subject to price regulations and guaranteed purchase and replace approaches based on increasing productivity in pricing (as opposed to the basis of accepting costs as the basis of price).
This economic expert stated: The next way to curb or control inflation is to adjust the salary increase of government employees and salary earners and to use alternative methods such as transferring shares, creating special deposits for participation in the benefits of construction projects, housing construction, etc., regarding salaries above one level. can be determined (e.g. 15 million Tomans) and grant baskets of supporting goods, educational, health, etc. allowances for salaries below a certain level) managing wage increases in the non-governmental sector by applying some discounts and paying part of the costs related to social security (insurance) The employer’s share) is in manufacturing companies and especially in companies producing export-oriented products.
Sabouri Dilami further pointed out another way to curb inflation by the government and said: moving in the direction of supporting and developing competitive mechanisms by using tools such as charging the difference from exclusive suppliers of goods and services and giving subsidies to develop competition from this place. Resources are also a way to curb inflation.
He added: Developing financial markets and limiting non-production and speculative activities, especially in the markets of items such as cars, housing, and raw materials needed by manufacturing enterprises, through the collection of progressive taxes from the income from these activities and encouraging the active cash flow from these markets to the capital market. And productive activities can be the next way to control inflation.
He added: serious fight against goods smuggling in order to support domestic manufacturing industries and enterprises and protection of domestic markets as well as coordination, providing clear reports and expanding the government’s relationship with the media, press and news agencies in order to provide appropriate and timely information to the members of society and prevent From the formation and promotion of insecurities, rumors and inducing despair in cyber space are the last two methods of controlling and curbing inflation.
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