Oil revenues stabilize exchange rate, fueling decline in inflation in Iran.
The study looked at how money demand and inflation changed in Iran from 1990 to 2002. They wanted to see if the drop in inflation during 2000-2002 was a big change in the data. They found that when the exchange rate stayed stable because of high oil money, people wanted more local money, which helped lower inflation. The tests showed that there was no big change in how inflation worked during the study period.