Prioritization of Monetary and Financial Markets in Order to Reduce the Inflation Caused by the High Volume of Liquidity and Achieve Sustainable Economic Growth by Using Fuzzy Analytic Network Process

Authors
Hassan Rangriz
Hooman Pashootanizadeh
Kharazmi University
10.52547/jde.1.1.83
Abstract
Achieving top and sustainable economic growth has always been desired in economic plans of countries. Proving the existence of positive relationship between financial market development and economic growth has made researchers study effective factors on growth and developing financial market. One of the most effective factors on the countries financial development is inflation.

Monetary and financial markets and their development are discussed to be a fundamental base for development and economic growth. In developed countries, these markets are extended. In developing countries, the expansion of these markets is in attention and considered as a target. Achieve this goal, means to expand the performance of financial markets, and requires sufficient information about the factors that affect these markets. Inflation is one of the most important factors can affected on development the financial markets. In addition to impact of inflation on financial market development, it can affect on optimal allocation resources. Therefore, in order to achieve the development of financial markets the inflation rate must be carefully guided.

The system based on market economy in macro level rests on quad markets. These markets include: goods, work, monetary and capital markets. Monetary and capital markets they are both related to financial sector. Financial sector the second aspect of the economy that actually complements real sector of the economy. Optimal functioning of the economic system in society depends on the existence complements, powerful and monitored in both natural and efficient financial sector. The combination of these sector activities is necessary and sufficient for desirable economic system.

In this paper, we use the ANP method to explore this topic that fits with the existing monetary and financial institutions, which sector is more appropriate for investment and targeted liquidity existing in society, in order to reduce inflation and stimulate growth in the industry. The results of both methods revealed the stock exchange is the best financial and investment institution in order to reduce the inflation that caused by the high liquidity of the present.
Keywords
Stagflation
Inflation
Risk management
Capital Market Risk
Ball, L., Mankiw, N. G. & Romer, D.(1991), The New Keynesian Economics & the Output – Inflation Trade-off, Brooking Papers Economic Activity,19:1-82.
Beckwith, j.(2001), Stock Selection in Six Major Non –U.S. Markets. Journal of Investing. 7(8): 29-44.
Celasum, O. & Mangal G.(2002), An Analysis of Money Demand and Inflation in the Islamic of Iran, IMF Working Paper.
Fischer, S., Sahay, R., Ve´ gh, C. (2002) Modern hyper—and high inflations, Journal of Economic Literature 40, 837–880.
Garcia-Melon, Monica, Javier Ferris-Onate, Jeronimo Aznar-Bellver , Pablo Aragonés-Beltran, and Rocio Poveda- Bautista (2008), Farmland appraisal based on the analytic network Process, Journal of Global Optimization, 42:143-155.
Jharkharia, S. and Shankar, R. (2007), Selection of logistics service provider: An analytic network process (ANP), Omega, 35(3): 274-289.
Luis, A.V. Catao, Marco E.Terrones (2005) Fiscal deficits and inflation. Journal of Monetary Economics, 52, 529–554.
Lacker, M.J., and J.A. Weinberg. (2007). Inflation and Unemployment: A Layperson’s Guide to the Phillips Curve. Economic Quarterly, 93(3), pp 201- 227.
Lucas, R.E., (1996). Nobel Lecture: Monetary Neutrality, Journal of Political Economy, 104(4), pp 661-82.
Ramanathan, R., (2001), A note on the analytic hierarchy process for environment impact assessment, Journal of Environment Management, 16(1) 27-35.
Saaty, T. L., (1990), How to make a decision: The analytic hierarchy process, European Journal of Operational Research, 48(1): 9-26.
Saaty, T. L., (1994), How to Make a Decision: The Analytic Hierarchy Process, Interfaces, 24(6): 19-43.
Samuelson, P.A., and R.M. Solow. (1960). Analytical Aspects of Anti-Inflation Policy, American Economic Review, 50(2):177-94.
Shiravani, H. & Wilberate. B.(1994). Money and Inflation: International Based on Contingent Theory, International Economic Journal, 8(1):11-21.
Zhou P., Ang B.W., Poh K.L., (2006), Decision analysis in energy and environmental modeling: An update, Energy, 3:2604-2622