Impact of inflation Uncertainty on Agricultural Investment in Iran

Investment in the agricultural sector is important in providing food security of each country. Accordingly, it is necessary to identify affecting factors on investment in this sector. Because of existence of natural limitations and risks, investment in the sector has faced with problems. Inflation uncertainty is one of the factors that could influence on investment in the economy. The aim of current study is investigation of effect of inflation uncertainty on agricultural investment in Iran during 971-2010. For calculation of uncertainty index, Autoregressive conditional Heteroskedasticity (ARCH) method and for estimation of model, Autoregressive Distributed Lag (ARDL) was used. The results of this study confirm that there is negative relationship between inflation uncertainty and agricultural investment. Considering the negative effects of inflation uncertainty in agriculture, policy of price adjustment is recommended to policy makers for stabilizing the economy and reduces uncertainty.