Feasibility of implementing the inflation targeting regime in Iran's economy

Iran's economy has been dealing with the problem of high and volatile inflation rates for several decades, and this problem has become more severe in the last few years. In order to control the inflation rate, the monetary policymakers have taken various measures, one of which was the announcement of the implementation of the inflation targeting regime in 2019, which was not very successful in practice. This paper is a desk research and uses the data of reliable statistical institutions of Iran such as Central Bank and Statistical Center of Iran. The purpose of this research is to answer these questions whether there are necessary prerequisites for the implementation of inflation targeting in Iran's economy or not. If such a regime is implemented, according to the statistical evidence, which part should be the priority for inflation control?Examining the preconditions for inflation targeting shows that Iran does not have the preconditions, except for appropriate analytical capabilities such as models necessary to predict the inflation rate and other key variables. Also, the investigation of the inflation structure in Iran's economy and the stylized facts revealed in this paper show that there is no way to reduce the inflation rate in Iran's economy without paying attention to the inflation rate in "food and beverages" and "housing, fuel and light" sectors. Also, due to the recession prevailing in the economy in the past few years, the conduct of contractionary monetary policies faced limitations and the growth rate of liquidity was accommodative, so it is not possible to control the inflation rate only through monetary policies and the fiscal policymaker must also play a role in this area.