Analysis of growth and inflation, and investigation of their causality relationship in Agricultural Sector of Iran

   There are implicitly some questions about the role of economic policies in growth and stabilization. Two important macroeconomic instruments are fiscal and monetary policies. Output growth and structural changes are not independent from price stability and foreign equilibrium, so that if inflation push-that appears in development process-is forgiven, the resources will be allocated inefficiently and this will prevent development.  In this research, data of years 1972 to 2001 and VAR method for dynamic analysis of effective factors on growth and inflation in agricultural sector are used. Results show that in agricultural sector, causality direction is from growth to inflation so that growth of agricultural sector has a negative effect on inflation in this sector. Variable of capital stock, labor, government and individual investment have positive effects on the output of agricultural sector in long run and variables of liquidity growth and exchange rate growth have positive effects on inflation in agricultural sector in long run.