Inflation and Reduction of Social Capital in Iran

Inflation is a most important variable in macroeconomic، which lead to social abnormalities and reduction of social capital، apart from affecting different economic sectors. As social capital is a necessary condition of economic development، the purpose of this paper is to investigate the effect of inflation on social capital in Iran during 1345 to 1385. To do so، in first step، the effect of inflation on social capital has estimated through Levenberg – Marquardt fitting algorithm. Then in second step، the effect of inflation on social capital along with policy variables (fiscal and monetary policies) has been estimated using vector autoregressive model. The results indicates that inflation have negative and significant effect on Iran’s Social capital during the considered period.