Abstract

Many factors influence CPI, the movement of main macroeconomic variables (Economic growth, employment and foreign exchange reserves) influence CPI a lot. In the paper, we can find the existence of cointegration relationships between main macroeconomic variables and CPI. This means the study of only one macroeconomic variable's shock effect to CPI is probable one-sided view. So, this paper uses impulse response and variance decomposition which both based on 4 variables VAR model and studies main macroeconomic variables' shock effect to CPI.

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