The Relationship between Inflation Rate, Oil Revenue and Taxation in IRAN: Based OLS Methodology

Abstract

In this paper we investigate the relationship between inflation behaviors relying to using oil revenue and taxation revenue as two distinguish original sources in Iranian economy. We employ the Ordinary Least Square (OLS) as methods for analysis data in short and long run periods. In this study, we found that the oil revenue and corporate tax are significant variables to measurement of consumer price index. Taxation has both positive and negative impact in economic growth and consumer price index due to increasing and decreasing inflation rate. Since increase export oil cause to increasing in price level in Iran, government ought to try to allocate the earning from selling of oil. On the other side, increasing in corporate tax cause to price level rises. So, policy makers and economics should reduces taxation on corporate to make incentive in investors to more investment.

Key Words: Microeconomic variables, Inflation rate, Taxation, OLS Methodology, Iranian economy