Mohammad Gholi Yousefi; Samad Daghigh
Volume 2, 4&5(Spring and Summer) , April 2000, , Pages 41-56
Abstract
Appropriate Industrial Location plays an important role in the success and performance of an industry. In this paper we have studied the location of industries in rural areas of Mazandaran province. We find that only four out of nine cases are in our priority lists of the study. This indicates ...
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Appropriate Industrial Location plays an important role in the success and performance of an industry. In this paper we have studied the location of industries in rural areas of Mazandaran province. We find that only four out of nine cases are in our priority lists of the study. This indicates that the present location chosen might probably be one of the main problems of these industries.
Therefore, non-economic factors may have been influential in determining the Location of industry in the rural areas of the province.
Kambiz Hojabr Kiani; Iraj Rahmani
Volume 2, Issue 7 , February 2001, , Pages 41-66
Abstract
After The Islamic Revolution in Iran, inflation became one of the most important problems. in the Iranian economy between 1978 and 1997 average inflation rate was above 20% while average rate of economic growth was only about 1.8%.This paper analyzes the relationship between real money and inflation ...
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After The Islamic Revolution in Iran, inflation became one of the most important problems. in the Iranian economy between 1978 and 1997 average inflation rate was above 20% while average rate of economic growth was only about 1.8%.This paper analyzes the relationship between real money and inflation in the demand schedule for money that Cagan used in his famous study of hyperinflation (1956).The results of this research suggest that Cagan's model of money demand with adaptive expectation hypothesis does indeed provide an adequate explanation of the salient features of the inflationary and monetary experiences of Iran between 1978 and 1997.It appears that unstable growth of money causes instability in price levels. Also the results show that monetary policies in Iran over the selected periods weren't in effect tantamount in maximization of the int1ation tax revenues.
Kambiz Hojabr Kiani; Maryam Khodamardi
Volume 4, Issue 10 , April 2002, , Pages 41-65
Abstract
Investment is one of the crucial issues in economics. In the literature, it is shown that increasing government (Public sector) investment will crowd out private investment. Given the long-term precedence of the public investment in Iran and its effects on economic variables, it is necessary ...
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Investment is one of the crucial issues in economics. In the literature, it is shown that increasing government (Public sector) investment will crowd out private investment. Given the long-term precedence of the public investment in Iran and its effects on economic variables, it is necessary to study this effect on demand for private sector investment while making macro-economic policies.Therefore, this paper attempts to evaluate the long-run equilibrium relationship between public and private investment for the "Iranian economy in the framework of the Auto-Regressive Distributed Lag (ARDL) Model. The result reveals a positive long-run equilibrium relationship between the public and private sector investment in Iran, that is, absence of crowding out effect.
Esfandiar Jahangard; Alireza Naseriborocheni
Abstract
In this paper, we combine the input-output approach with fuzzy clustering using the input-output tables of 2011 and 2006 in order to identify the sectoral weights of the Iranian economy. The outliers were separately clustered in order to eliminate their undesirable effects on clustering. The results ...
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In this paper, we combine the input-output approach with fuzzy clustering using the input-output tables of 2011 and 2006 in order to identify the sectoral weights of the Iranian economy. The outliers were separately clustered in order to eliminate their undesirable effects on clustering. The results show that key economic sectors in the manufacturing and mining (non-metallic minerals, basic metals, machinery and equipment n.e.c., distribution of gaseous fuels through mains, other mining, coke and refined petroleum products and nuclear fuels), in Iran are outliers, hence, need to be separately clustered. Moreover, the key sectors are "crude petroleum and natural gas" - "wholesale and retail, maintenance and repair of motorcycles and related parts and accessories, public administration, land transport and agriculture" for export promotion and job creation, respectively.
Energy Economy
Ali Faridzad; Shamsi Ghasemi; Mehdi Ahrari
Abstract
A review of empirical studies in the field of insurance of upstream oil and gas projects suggests that domestic insurance companies and insurance consortiums in Iran rely on the experience of reinsurance companies to determine premiums and risk conditions. Given the economic sanctions and restrictions ...
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A review of empirical studies in the field of insurance of upstream oil and gas projects suggests that domestic insurance companies and insurance consortiums in Iran rely on the experience of reinsurance companies to determine premiums and risk conditions. Given the economic sanctions and restrictions on determining precise premiums and conditions for direct insurance and reinsurance of oil assets, it is necessary to establish a method to determine premiums even under normal circumstances that can be referred to international reinsurers. To address this need, the present study adopted an empirical method that uses risk-based valuation and the monetary value at risk (VaR), which covers a wide range of relevant oil and energy insurance aspects. The results showed that the research method can determine the premium of oil assets following international standards, taking into account expert opinions and other domestic considerations.IntroductionOil and gas continue to be among the primary sources of energy globally, hence a crucial and fundamental part of the world economy. The various sectors within this vast field offer significant capacities and resources at a large scale, including research, equipment, and resources for exploration, development, and utilization, as well as the derivatives in the real sector processes. In addition, transportation, exchanges, transactions, physical markets, and stock exchanges also play a significant role in this industry. The world economy is thus highly dependent, both directly and indirectly, on the oil and gas industry. It is evident that the global oil and gas industry involves a vast amount of capital and risk, which is more complex and extensive than one may imagine. The industry interacts with numerous sectors of the economy, with extensive links that exceed beyond a single field. Considering the relatively small share of oil and energy insurance in the portfolio of the insurance industry, there are various factors that prevent the entry of insurance services into this area on a significant scale. One significant obstacle is the lack of scientific studies on determining the value at risk for oil assets, which is a crucial factor in determining the volume and size of insurance premiums for insurable oil and gas assets. Using the valuation and estimation of monetary VaR of oil assets, the present study aimed to develop a method for insurance companies to determine the insurance premium of oil and gas assets. An example was provided to demonstrate the applicability of the proposed method in practice. Materials and MethodsTo conduct a risk-based valuation, the study employed Smith’s method as well as the method proposed by Knapp and Heij in order to estimate the value at risk for oil assets.The NPV for the valuation model of exploration and development risk will be as follows (Smith, 2004): (1)Where CF0 is the drilling cost, is the probability of a failed well and {CF1, CF2... CFr} are the expected cash flows in case of success of the well and (i) is the discount rate.According to Knapp and Heij (2017), identifying risk factors, which are variables that pose a risk for an oil asset, is crucial in estimating the value at risk. The risk factors are evaluated based on their probability of occurrence.The monetary VaR is estimated based on the insurable value of a physical asset, which is typically the replacement cost or the actual cash value of the asset covered by standard insurance policies.To estimate the value at risk, two probabilities are combined, which are determined based on the total insurable value (TIV). For instance, if there are five risk groups denoted as j (j=1,...,5), vj represents the sum of the insurable value for each type. TIV is defined as the total of all five groups, as follows: Furthermore, Pinc represents the probability of an event occurring within a year. Pj is the conditional probability of damage in group j occurring in relation to a particular event. Then monetary VaR is then defined as follows: (2)It is important to note that TIV is derived from the method proposed by Smith (2004), which can be used to assess the value of the entire property or its individual parts and components.The insurance rate and premium can be estimated on the basis of the model of exploration and development risk, along with the future discount rate. This estimation includes the initial cost (drilling or installation cost) CF0 and is given by the following equation:NPV, in Relation (1), is replaced by the future value (FV) or the total insurable value (TIV) of the oil asset.CFt = CF0: NPV is equivalent to book value or price determined by official experts or official pricing authorities.PDH: Probability of occurrence of major risks, which is considered equivalent to catastrophic risks leading to total damage.i: It represents risk insurance premium, which is equivalent to the probability of the occurrence of conventional risks that each oil asset faces according to its specific conditions.Now Relation (1) will be changed to Relation (3): (3)Now monetary VaR is calculated as follows: (4)In equation (4), V is TIV, which is equivalent to FV calculated based on Relation (2).Results and DiscussionThe study used the information on the insurance policy of HP-2000 drilling rig of North Drilling Company. Table 1 Information on the HP-2000 drilling rigThe value of the drilling rigReinsurance premium rateMarket premium rateInsurance premium12000.0040.00283.4(billion rials) (million rials)* Source: issued insurance policyThe future value of the drilling rig for one year is described in the following table:Table 2 The future value of the drilling rigNPV iFV12000.00220.0032400(billion rials) (billion rials)* Source: research resultsThe monetary VaR based on the future value at risk (FV), which is equivalent TIV, for the insured drilling rig is as follows according to Relation (2):Table 3 The monetary VaR of the drilling rigFV=TIV MVR24000.00220.84.3(billion rials) (million rials)* Source: research resultCatastrophe risk (Pinc) and the 5-fold decomposed risks of the oil rig are determined based on expert opinion, which will be the basis of monetary VaR estimation.The premium values and the rate calculated based on the monetary VaR were compared to the premium values in both cases of reinsurance and market (Table 4). Premium rate is obtained by dividing premium, which in the proposed methods is equal to Monetary VaR (MVR), by oil rig price.Table 4 Comparison of the insurance premium rate based on the MVR method with the reinsurance and market rateMVR rateReinsurance rateMarket rate0.00350.0040.0028* Source: research resultsConclusionThe present study highlighted the characteristics and significance of the oil, gas, and petrochemical industry within the global economy, emphasizing the extensive interactions of this industry with various sectors of the economy, particularly in the field of insurance.The study used a distinctively innovative methodology which combines Smith’s (2004) risk valuation of oil assets with Knapp and Heij’s (2012; 2017) monetary VaR approach to determine the insurance premium rate. The proposed research method allows for the determination of an insurance premium rate that is equivalent to international reinsurance rates, based on the factual, environmental, and market conditions. The study offers insurance and oil engineering experts the possibility of calculating an appropriate insurance premium rate for an oil project based on the identified risks using empirical and technical knowledge, as considered in the proposed method.
Atousa Goudarzi; Afsaneh Shafiee
Volume 17, Issue 50 , April 2012, , Pages 43-64
Abstract
This paper analyzes Iran's banking market structure, using unbalanced panel data models during 1997-2009. To study the market structure, various measures of market concentration are examined theoretically and the U index of concentration is applied to Iran's banking system. The results show that, along ...
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This paper analyzes Iran's banking market structure, using unbalanced panel data models during 1997-2009. To study the market structure, various measures of market concentration are examined theoretically and the U index of concentration is applied to Iran's banking system. The results show that, along with the commencement of privatization in Iran's banking sector (2001), U index of concentration has tended to decrease, indicating that competition in Iran's banking market has intensified. However, this may not happen until the strict regulations on private banks are relaxed.
Mohsen Zayanderoody
Volume 3, 8(Spring and Summer ) , April 2001, , Pages 43-57
Abstract
Income Tax and Labour supply is an important part in public sector Economics. Income tax affects labour supply which in turn affects the national income. Economic theory cannot predict the effect of tax on Labour supply, because are in opposite directions. This research is concerned with the effect substitution ...
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Income Tax and Labour supply is an important part in public sector Economics. Income tax affects labour supply which in turn affects the national income. Economic theory cannot predict the effect of tax on Labour supply, because are in opposite directions. This research is concerned with the effect substitution and income effects of taxation on labour supply by an econometric study of cross-sectional data. It is assumed that the effect of taxation is to alter budget constraints. Because different individuals have different gross wage rates and different amounts of other income, they have different budget constraints. If difference in preferences are adequately controlled for, it is possible to derive labour supply estimates from the cross-sectional data which can then be used as basis for estimating the effect of taxation. In this study we show that the effects of net wage rate on labour supply is significant, that non wage income is not significant. We finally recommend a policy for tax refoRm by changing the marginal tax rate.
Hamid Abrishami; Mohsen Mehr Ara
Volume 3, 9(Autumn and Winter ) , October 2001, , Pages 43-88
Abstract
The purpose of this study is to discern the interaction between nominal and real sectors in the context of an oil exporting economy such as Iran. The methodology uses a modeling strategy named structural VECM which provides a practical approach to incorporating long - run structural relationships, ...
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The purpose of this study is to discern the interaction between nominal and real sectors in the context of an oil exporting economy such as Iran. The methodology uses a modeling strategy named structural VECM which provides a practical approach to incorporating long - run structural relationships, suggested by economic theory in an structural VAR model. The strategy is applied in the construction of a small quarterly macro econometric model of Iran estimated over the period 1350 QI - 1376 Q4 (1971Q1- 1997Q4) in eight core variables: output, import, price, money, exchange rate, wage, productivity and premium. Our results suggest that the usefulness of the IS/LM model to interpret economic effectuations in Iran is limited and provide support to what McCallum (1989) calls, "Weak" version of equilibrium (real) business Cycles models.
Game theory
Farshad Momeni; Reza Shohreh
Abstract
Over the past half-century, the impact of the prisoner’s dilemma has transcended its initial boundaries, influencing a broad spectrum of institutional studies and analyses of interdependent systems, such as collective action, public goods, governance of the commons, social norms, and social capital. ...
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Over the past half-century, the impact of the prisoner’s dilemma has transcended its initial boundaries, influencing a broad spectrum of institutional studies and analyses of interdependent systems, such as collective action, public goods, governance of the commons, social norms, and social capital. Given this extensive influence, the latent fundamental flaws in this model can lead to misleading result for researchers and policymakers. As a descriptive–analytical research, the present study employed evolutionary game theory to examine the shortcomings of the iterative and evolutionary prisoner’s dilemma. It went on to introduce an alternative framework to explain the emergence and transformation of institutions. The critical discussion highlighted fundamental deficiencies of the prisoner’s dilemma manifested in four distinct levels of institutional analysis: the definition of institutions, identification of their function, explanation of their emergence, and description of their transformations. Consequently, the model is not capable of explaining institutional issues mentioned above. Addressing the role of uncertainty and considering the impact of small-world networks on payoff distribution, the second part of the study used a semi-parametric stag hunt matrix to model the cooperation problem. The results indicated that the non-spontaneous overlap between strong and weak ties can accumulate synergistic flows between content and structure, creating an environment conducive to institutionalizing capacity for achieving public goods on a large scale. Therefore, the process of overcoming social traps begins not with the punitive rules proposed by the prisoner’s dilemma, but with synergetic institutions that enhance the opportunity to discover common interests.IntroductionThe relation between institutions and development has been well recognized for quite some time. Numerous studies have delved into collective action, public goods, the governance of the commons, informal institutions, social capital, and the like. These areas serve as a common ground between two realms of economics: the theory of institutions and game theory. However, the majority of game theory studies are based on the assumption that the payoff distribution follows the prisoner’s dilemma. In the payoff matrix of the prisoner’s dilemma, the additional benefit of unilateral non-cooperative action results in a dominant strategy, preventing rational players from attaining the mutual benefits of cooperation. The central question in this literature is: how have human beings successfully established society and built civilization? There are three general solutions in the literature on the iterative and evolutionary prisoner’s dilemma. The initial solution, incorporating concepts like meta-game, folk theorem, reputation effect, and the norm of reciprocity, asserts that if the game repeats endlessly, cooperation becomes a foresight-driven choice. Contrary to this approach that suggests a form of spontaneous order, some sociologists argue that negative externalities of individual actions cannot be resolved by foresight or reciprocity, so the evolution of cooperation is only achievable through authoritative relations and punitive norms. The third solution, rooted in a biological assumption, contends that the prisoner’s dilemma can be solved through instincts without the need for rationality. The current article critically examined each of these approaches, and then introduced another payoff distribution matrix to explain how cooperation evolves in human society.Materials and MethodsThis study used a descriptive–analytical method as well as evolutionary game theory.Results and DiscussionThe article can be categorized into two main sections: the critical discussion and modeling. In the critical discussion, the results drawn from agent-based networks indicated that, even in the case of an endlessly repeating game, the emergence of the first cooperators would remain unexplained within the specific payoff matrix. Then, it was demonstrated that a substantial gap between theory and observation arises due to the inadequacy of the Prisoner’s dilemma in representing uncertainty. The discussion also addressed the contradiction stemming from overlooking the institutional context, particularly in defining reciprocity and explaining the emergence of norms. Moreover, the discussion highlighted some tautologies hidden in these definitions and explanations. Finally, three reasons were presented to underscore that the biological approach falls short of explaining how cooperation evolves in small-world networks.The discussions highlight fundamental deficiencies in the prisoner’s dilemma across four distinct levels of institutional analysis: the definition of institutions, identification of their function, explanation of their emergence, and description of their transformations. At the definitional level, the logic is fundamentally flawed due to its oversight of uncertainty as well as the mere emphasis on non-cooperative payoffs. Concerning the identification of function, the model predominantly stresses control and punishment, neglecting synergetic institutions that enhance opportunities to discover common interests, foster social synthesis on a large scale, lay the foundation for social contracts, and legitimize punitive rules. Moreover, an evolutionary model can only explain the endogenous emergence and transformation of institutions if it first demonstrates how a payoff matrix, where non-cooperation is a dominant strategy, can create a sustainable learning process. According to the results of agent-based networks, such a process cannot be explained in the prisoner’s dilemma.Nevertheless, evolutionary models, by sidestepping the assumptions of perfect rationality and information, possess a suitable capacity for studying interdependent systems and institutional analysis. Therefore, an alternative model can be formulated by implementing some reforms, including the utilization of the stag hunt matrix to account for uncertainty, incorporating small-world networks to better align with human societies, and ultimately introducing a semi-parametric payoff matrix to incorporate the influences of social structures.The results from the revised stag hunt model showed that the non-spontaneous overlap between strong and weak ties can accumulate synergistic flows, creating a conducive environment to institutionalizing capacity for achieving public goods on a large scale. Therefore, the process of overcoming social traps begins not with the free ride punishments proposed in the prisoner’s dilemma, but with synergetic institutions that enhance the opportunity to discover common interests.ConclusionThe prisoner’s dilemma describes a great challenge concerning micro-level conflicts of interest. However, using this model to explain the emergence and transformations of institutions is bound to yield highly misleading results for researchers and policymakers. Instead, the theoretical framework proposed in this study should find application across a broad spectrum of institutional studies, including analyzing the impacts of inclusive institutions on overcoming social traps, designing society-oriented methods for governing the commons, explaining the accumulation and modeling the measurement of social capital, and examining the social consequences of economic inequality.Keywords: Institutions, Cooperation Problem, Evolutionary Game Theory, Prisoner’s Dilemma, Stag HuntJEL Classification: C73, O43.
Mehdi Hadian; Hassan Dargahi
Abstract
The aim of this study is to investigate the role of macroeconomic policies in the financial stability of Iran’s economy. Based on Dynamic Stochastic General Equilibrium models, a model capable of tracing interactions between the real and the financial sectors has been constructed. In the financial ...
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The aim of this study is to investigate the role of macroeconomic policies in the financial stability of Iran’s economy. Based on Dynamic Stochastic General Equilibrium models, a model capable of tracing interactions between the real and the financial sectors has been constructed. In the financial modeling, the characteristics of Iran banking system, such as NPLs and frozen assets, have been incorporated. The results of simulations based on quarterly data of Iran economy during 1990-2014 show that stabilization policies are able to restrict financial vulnerabilities by reducing the fluctuations of the real sector variables. As a result, the stability of the real sector is a prerequisite for the stability of the financial sectors. Also due to the financial and real sector communications, the effects of declining vulnerabilities of the financial sector enhance the impacts of stabilization policies in the real sector. These effects result in the improvement of macroeconomic environment and increase in social welfare.
Monetary economy
Hooman Karami Khoramabadi; Alireza Erfani; Hosein Tavakolian
Abstract
This paper investigates the effectiveness of monetary policy in recession and expansion periods of business cycles in Iran. It uses the distribution of price changes over time using micro-data of producer and consumer price indices from March 2004 to March 2007 and March 1990 to March 2017. Results show ...
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This paper investigates the effectiveness of monetary policy in recession and expansion periods of business cycles in Iran. It uses the distribution of price changes over time using micro-data of producer and consumer price indices from March 2004 to March 2007 and March 1990 to March 2017. Results show that the observed distribution price changes at the producer and consumer levels change significantly over time. Whereas price flexibility (or, similarly, price stickiness) is closely related to the impact of monetary policy, the variable distribution of price changes over time suggests that the effectiveness of monetary policy should also change over time. We estimated the related parameters using the Ss model and the observed facts from the distribution of price changes, the price flexibility index, which shows how prices react to a monetary policy shock. The correlation coefficient and regression analysis results showed that the price flexibility index is counter-cyclical; this means that during periods of economic recession, the index of price flexibility increases. Therefore, the impact of monetary policy on real output decreases. However, during periods of economic expansion, the impact of monetary policy increases.
Soheila Parvin; Maryam Mastali Parsa
Abstract
Cutting public subsidies like fuel subsidy or changing in payment method will have different impacts on each social group. Subsidy targeting is able to decrease consequences of this policy. Now, in a possible situation to classify the households according to their socio-specific characteristics like ...
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Cutting public subsidies like fuel subsidy or changing in payment method will have different impacts on each social group. Subsidy targeting is able to decrease consequences of this policy. Now, in a possible situation to classify the households according to their socio-specific characteristics like gender and head and identify the poverty groups, the government can provide subsidy for that specific group. Statistics show that female-headed households, due to the limitations and barriers to the labor market suffer from various aspects of poverty. Our main purpose in this article is, first of all, to classify the household groups into male and female heads within the social accounting matrices for the year 2009 and 2011. The results show that the average cost of living index of households decreases from 0.055 in 2009 to 0.048 in 2011. This means that by reducing the subsidy by one unit, households in 2011 compared to 2009 should pay 0.007 less for the same consumption basket. Also, the average of female-headed household cost of living index decreases from 0.070 in 2009 to 0.046 in 2011. More decrease of the mentioned index indicates more poverty for this group.
Monetary economy
Abbas Shakeri; Elnaz Bagherpour Oskouie
Abstract
High and continuous inflation in Iran's economy as a structural dilemma has adverse economic, political, and cultural outcomes, and to control the inflation, policymakers should employ appropriate and well-timed policies concuring to the economic structures of the country. Hence, this study points to ...
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High and continuous inflation in Iran's economy as a structural dilemma has adverse economic, political, and cultural outcomes, and to control the inflation, policymakers should employ appropriate and well-timed policies concuring to the economic structures of the country. Hence, this study points to distinguish and analyze the nature of inflation. For this reason, the present study examines the dynamics of the causal relationship between inflation and liquidity as well as the relationship between inflation and exchange rate by applying the continuous wavelet transform approach using monthly data during the years 1982 to 2021 in Iran’s economy. The results indicate: 1. Liquidity does not infulence the inflation rate in the long term and there is a reverse causality (causality from inflation to liquidity) and this result affirms the endogeneity of liquidity in the long term in Iran's economy. 2. The exchange rate growth shocks (from the supply side of the economy) affect inflation, in a way that the exchange rate altogether influences the inflation in both the short and long term.1.IntroductionAmid the last few decades, high and steady inflation has been a serious economic problem in Iran's economy. Empirical evidence suggests that in the years 1995, 1996, 2013, 2014, 2019, and 2020-21, Iran's economy has suffered from heavy and sequentional inflations. However, the perseverance of high inflation, especially since 2020, has turned into a fundamental problem. The main issue about the inflation in our country is not the inflation per se, but the critical status of it has faced development plans with great challenges for many years. Then again during the last decade, the economy tried to control inflation by restricting the growth of the money supply. But it appears that the results come to oppose established recommendations to curb the growth of liquidity. Therefore, the question raised in the present study is whether the high inflation rate in Iran's economy is due to the rise of the money supply.Although the relationship between inflation and liquidity in the economy has been examined in several studies, the significance of inflation and its relation with macroeconomic variables- the broad previous and subsequent link with other variables- exaggerates the study of the relationships among these variables and other macroeconomic variables in different time scales. In this regard, the present study examines the relationship among some key monetary and price variables in the economy (dynamics of the relationship between inflation and liquidity as well as inflation and exchange rate).2.Methodology and MethodsThere are several methods to examine the interrelationships of inflation, exchange rate, and liquidity that are commonly divided into the form of statistical methods as well as model-based methods. But, since the causal relationship between these variables is likely to change over time, so further exploration of those relationships requires techniques that consider the relationship between two variables over time and different time horizons (different friquencies). Unlike most statistical and econometric techniques, the wavelet approach does not require variables to be survivable, nor does it assume linear relationships between them. In contrast to time series techniques, the use of wavelet approaches, especially wavelet coherence and continuous wavelet transform approaches within the framework of the methodology of econophysics (econophysics), opens new horizons in the study of causality in time series, because it shows the possibility of dynamically examining effects at different frequencies by separating it to the short and long term. To this end, the present study, using the continuous wavelet transform approach, examines the dynamics of the causal relationship between inflation and liquidity and the relationship between inflation and exchange rate by applying monthly data during the years 1982:1 to 2020:12 in Iran’s economy.3. Discussion and ResultsGenerally speaking, based on what we've learned regarding the rooting of inflation in the our economy, it can be said that when the inflation rate increases and reaches a level higher than the average inflation (30 to 40 percent), such as when the average inflation rate shows lower figures, other monetary variables cannot be illustrative. Also, regarding the rooting of inflation, it can be said that in recent years, due to the adjustment policy, decrease of oil exports or sanctions, the demand for foreign currency exceeded its supply, and we witnessed instabilities in the exchange rate. Hence, the instability and fluctuations in the exchange rate and its concerned indicators do not exclusively follow monetary conditions.Therefore, the stability of exchange rates leads to the stability of prices and the limitation of monetary follow ups, and the resulting inflation itself causes more changes in the exchange rate in the next period.4. ConclusionIn the current economic situation, the appreciation of the exchange rate is the cause of inflation and high inflation is to a noteable extent the cause of the budget deficit and liquidity growth. Therefore, another factor is the supply side that causes inflation and is not a monetary factor. Therefore, in a situation where the endogenous creative forces of liquidity are active, relying on controlling the amount of money and liquidity as the goal of monetary policy and a solution to curb inflation will not work and will pave the way for speculators and unproductive agents. Therefore, in order to achieve the price stability, it is recommended that the monetary policy maker should a) avoid instant changes in relative and key prices (the most important of which is the exchange rate) and b) control the bank interest rate along with the structural reforms of the banking system in a way that the banking system moves toward optimal allocation of credit resources.
Sajad Ebrahimi; Seyed Ali Madanizadeh; Amineh Mahmoudzadeh
Abstract
By regulations, the Iranian banks have limitations in setting their interest rates, yet the evidence shows that the loan rates vary across borrowers. This paper analyzes these differences in the rates and what affect them. In addition to the factors influencing the borrower’s risks directly, we ...
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By regulations, the Iranian banks have limitations in setting their interest rates, yet the evidence shows that the loan rates vary across borrowers. This paper analyzes these differences in the rates and what affect them. In addition to the factors influencing the borrower’s risks directly, we investigate the effects of other various factors such as the properties of the lending banks as emphasized in the literature. In this regards, using the listed companies in Tehran Stock Exchange database, we construct a firm-bank panel dataset that contains the outstanding loans of a firm from each bank for the period of 2007-2014. Using panel data estimation, we show that changes in Non-Performing Loan (NPL) ratios of the lending bank has significant effect on the borrowers’ financial costs. In addition, an increase in the share of the loan from private banks, the number of firm-bank relationships and leverage ratio of the firm increase the firms’ financial costs. Finally, we show that working capital ratio, collateral ratio and degree of dependence on imported inputs have significant effects on firm’s financial costs.
Macroeconomics
Mohammad Hossein Jafari; Amineh Mahmudzadeh; Masoud Nili
Abstract
This paper examines the potential of government fiscal support in mitigating the consequences of shocks, particularly in relation to the infection rate of contagious diseases. The focus is on the emergence of Covid-19 and the various interventions implemented by governments to combat it. The study utilizes ...
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This paper examines the potential of government fiscal support in mitigating the consequences of shocks, particularly in relation to the infection rate of contagious diseases. The focus is on the emergence of Covid-19 and the various interventions implemented by governments to combat it. The study utilizes a cross-country analysis, using a dataset that includes government fiscal measures, infection rates, and selected institutional and economic metrics from different countries. To isolate the effects of vaccinations, the analysis is specifically focused on the year 2020. The findings indicate that a one percentage point increase in the ratio of direct government spending to GDP corresponds to an approximate 0.08 percentage point reduction in the confirmed infection rate. Given the average infection rate of 1.6 percent in 2020, this translates to a significant 5 percent decrease in infection rates. Additionally, the study reveals that the effectiveness of fiscal support measures is influenced by the institutional quality of the countries. Higher institutional quality is associated with greater effectiveness of fiscal support measures in reducing the infection rate. Furthermore, the study highlights that the impact of government spending on reducing the infection rate is enhanced when accompanied by the implementation of governmental rules.1.IntroductionWith the outbreak of the COVID–19 pandemic, countries faced with a widespread shock that precipitated health–economic crises. In an effort to curb the spread of the disease, governments implemented quarantine measures while concurrently endeavoring to aid vulnerable households and businesses, aligning citizens with restrictive policies. It is essential to note that government responses extended beyond financial support; a comprehensive set of policies was enacted to address the outbreak and its ramifications. In this respect, the present research aimed to study the impact of fiscal measures on the prevalence of COVID–19.The study investigated the hypothesis that government financial support may contribute to diminishing the prevalence of COVID–19. Should this hypothesis prove valid by drawing from the lessons learned during the COVID–19-induced shock, we can advocate for a more widespread application of fiscal policy tools in similar circumstances. This recommendation may extend beyond the conventional goal of stabilizing the macroeconomy, encompassing a proactive approach towards reducing infection rates. Yet a significant portion of the existing literature refers to the limited role of fiscal policies in stabilizing economy.The significance of this study lies in its quantitative assessment of the impact of monetary and fiscal policies, along with the identification of institutional factors that influence the scale and composition of supportive policies. This information can help policymakers to make necessary institutional changes, enabling a more adept response to potential future shocks.In line with the hypothesis testing, the research also investigated the impact of certain fiscal support measures adopted by governments on reducing the infection rate of COVID–19.2.Materials and MethodsDue to the absence of the necessary database for testing the research hypothesis, the researchers constructed a suitable database by amalgamating and refining data sourced from various databases, including research centers specializing in infectious diseases, the World Bank, and other international statistical institutions. The study used a cross-country panel analysis to measure the impact of fiscal policies while controlling for influential variables.3.Results and DiscussionThe study showed that the overall direct government expenditures aimed at combating the outbreak of COVID–19 had a significantly negative relationship with the confirmed infection rate. This finding demonstrates a satisfactory level of stability in relation to changes in the control variables.Furthermore, the study employed the rule of law index to measure the impact of institutional quality on the effectiveness of expenditures. The index did not show a direct correlation with the infection rate. However, the significance of the coefficient associated with the product of the rule of law and government direct expenditures suggests that enhancing institutional quality can increase the effectiveness of expenditures in reducing the infection rate.The analysis of the expenditures indirectly linked to health revealed that a one-percentage-point increase in the ratio of such expenditures to GDP led to a 0.13 percentage-point decrease in the confirmed infection rate. Given the average 1.6% infection rate in 2020, this translates to a 5% decrease in the infection rate.The research results indicate that support provided through grants to small businesses, aids to tenants, income support for households, and expenditures resulting from reductions in various tax bases or similar measures proved successful in aligning businesses and households with quarantine policies. Moreover, these measures demonstrated a relatively acceptable ability to reduce the infection rate. Considering the average ratio of 3.4% of these expenditures to GDP of countries, it can be asserted that with an approximately 30% increase in support (equivalent to a one-percentage-point increase in this ratio), the average infection rate has decreased by 5%, hence a decrease in the mortality rate.4.ConclusionThe research results indicate that fiscal policies, beyond their role in stabilizing the macroeconomy, remain a potent tool in the hands of policymakers. Appropriately employed, these policies have the potential to mitigate the adverse effects of severe shocks, such as the outbreak of a disease. Specifically, the research highlights the effectiveness of fiscal support policies adopted during the COVID–19 outbreak in aligning households and businesses with imposed restrictions. There was evident reduction in the infection rate, even when controlling for other influential variables. Furthermore, the study underscored the impact of institutional quality, measured by the rule of law index, on the effectiveness of government fiscal support. It suggests that fiscal support measures carried out within a robust institutional framework demonstrate greater effectiveness. Conversely, in contexts characterized by weak institutions, the effectiveness of fiscal support is diminished.
Akbar Nafari; Saeed Rasekhi
Volume 4, Issue 11 , July 2002, , Pages 55-93
Abstract
The purpose of this paper is to identify and analyze country-level determinants of Intra-industry Trade (IIT) in 13 selected developing countries from 1994 to 1998. To accomplish this, both bilateral and total trade flows calculated were for all the 13 countries. The determinants of IIT have been estimated ...
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The purpose of this paper is to identify and analyze country-level determinants of Intra-industry Trade (IIT) in 13 selected developing countries from 1994 to 1998. To accomplish this, both bilateral and total trade flows calculated were for all the 13 countries. The determinants of IIT have been estimated using both pooled and cross-sectional data. The results support the hypothesis that the economic growth is a factor determining the IIT. They also suggest that market size, membership in regional economic organization and similarity in per capita incomes are other country-specific determinants of IIT. In addition, it seems that a common language has the positive effect on bilateral IIT. On the other hand, the results suggest that trade barriers limit IIT and R&D expenditures reinforce inter industry trade, and that there is a significant negative correlation between the extent IIT and trade imbalance. However, the paper does not provide definite results concerning the effect of both distance and multinational enterprises (MNEs) on IIT. In short, the results of the present paper indicate the significance of country-specific factors in determining IIT. Whereas IIT theories basically concentrate on industry-specific factors.
Ali Asghar Banouei; Behzad Almasi Koupaie; Azita Jahani; Mehri Ameri; Mahya Lali; Saeedeh Saadatmandi
Abstract
In the combined domain of economy and environment, the process of production of goods and services contain three intertwined cycles: primary cycle (natural resources), secondary cycle (intermediate and final goods and services) and the end cycle (overflows, wastes or waste disposal to the environment). ...
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In the combined domain of economy and environment, the process of production of goods and services contain three intertwined cycles: primary cycle (natural resources), secondary cycle (intermediate and final goods and services) and the end cycle (overflows, wastes or waste disposal to the environment). The Monetary Input - Output Table (MIOT) organizes only the visible production process of goods and services and data are in terms of price - quantity simultaneously. Prices in MIOT are ordinary, homogeneous and positive for an accounting period. The other two cycles are exogenous with zero prices. As they are outside of the accounting system, we call them invisible cycles. In order to remove this limitation, the Physical Input - Output Table (PIOT) has been designed by some of European countries at the end of 20th Century. This table considers simultaneously all the three cycles in the visible manner. The data are of physical in nature (in tons) without prices and mass unit instead of value unit is used. The design of the PIOT parallel to the MIOT is triggered by two major questions among the analysts in the 21th Century. Firstly, which one of the two tables can reveal the interworen physical nature of economic-environment and sustainable development? Secondly, analogous to the basic theory of MIOT, is it possible to model the PIOT? With respect to the questions posed, the existing literature in the past fifteen years are classified into three groups: The empirical evidences of the first group show that as compared to the MIOT, the PIOT has more potentiality in revealing the physical nature of the combined economic-environment in relation to the sustainable development. This finding is questioned by the second group. The third group has cast doubts to the pros and cons of the treatment of waste as input or output and suggest that the differences are not in the treatment of waste as an input or output. According to them, the root of the differences lies in the nature and the function of prices in both the MIOT and PIOT. The third group overshadows two points: One is that they have not identified the use of the different types of prices like; implicit, unit and homogeneous or implicit matrix prices in converting PIOT to MIOT. Second is that they have not discussed the issue of the balancing of the converted PIOT to MIOT. Based on the 1990 PIOT and MIOT of Germany, we demonstrate first of all that the double deflation method cannot convert the PIOT into MIOT and secondly, use of the implicit matrix price under the assumption of the zero price of waste can convert the PIOT into the MIOT.
Planning and Budget
Hamid Reza Ghasemi; Ali Arabmazar Yazdi; Reza Zamani
Abstract
In the approach of new institutionalism, the budgeting system's complexities have roots in its formation's historical development. Understanding this historical development from the perspective of institutions and organizations has made it easier to understand the complexities that the country's budgeting ...
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In the approach of new institutionalism, the budgeting system's complexities have roots in its formation's historical development. Understanding this historical development from the perspective of institutions and organizations has made it easier to understand the complexities that the country's budgeting system is facing today. Using the social order approach and relying on the three elements of institutions, organizations, and violence control, this research has examined the budgeting system of Iran between years of the constitutional revolution and the end of the Qajar dynasty. In this period, the approval of the constitution, the internal regulations of the parliament, the law on the formation of the Ministry of Finance, the law on public accounts, the law on the Court of Accounts, and the writing of the budget law, as well as more predictability of resources and cost allocations by limiting the period of the budget have taken place. Also, checking the accounts of ministers, preventing illegal transfers, preparing and deducting the budget, increasing the power of tax collection, organizing the country's treasury and prohibiting the imposition of taxes based on personal opinion, and providing executive methods related to the budgeting system in addition to the formation of the parliament and the budget commission, the Audit Bureau, the Ministry of Finance and the commission for handling the income and expenditure of the ministries have led to the improvement of the quality of institutions and the development of contractual organizations with a permanent life in the budgeting system, which has caused the control of violence. By examining the budgeting system, one can conclude that the dominant coalition member groups in the period under review were princes, nobles, scholars, businessmen, landowners, the intellectual class, Russian and British governments. Examining institutions, organizations, and violence control show that the budgeting system has changed from a fragile limited access order to a basic limited access order in this period.
Masoud Derakhshan
Volume 17, Issue 52 , October 2012, , Pages 33-71
Abstract
We first define and briefly examine the “imitative” and “indigenal” approaches in conventional economic theories from an Islamic Economic perspective. We then review briefly the concepts of “indigenous” and “indigenization” in the humanities and social ...
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We first define and briefly examine the “imitative” and “indigenal” approaches in conventional economic theories from an Islamic Economic perspective. We then review briefly the concepts of “indigenous” and “indigenization” in the humanities and social sciences from the points of view expressed by Imam Khomeini (ره) and the Supreme Leader. We have subdivided the “indigenal approach” into “comparative” and “foundational” approaches. It is shown that in the comparative approach, a critical analysis of the underlying assumptions in economic theories, and specifying the shortcomings of the logic of abstraction employed in economic theorization particularly in identification of economic players and their status in conventional economic theories, can be productive. However, this approach suffers from the lack of adequate potentialities for successful theorization in Islamic Economics, hence cannot be used as a basis for economic policy formations. The paper concludes by proposing the foundational approach as the only solution to indigenization of economics as well as the necessary condition in building Islamic-Iranian model of economic progress.
Morteza Naderi
Volume 5, Issue 15 , July 2003, , Pages 37-62
Abstract
In this paper, we study the literature of financial development and economic growth. The financial systems in respect to their operations and their effects on real sector are considered.The result of an empirical study about the financial crises and their effects on the economic growth and determinants ...
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In this paper, we study the literature of financial development and economic growth. The financial systems in respect to their operations and their effects on real sector are considered.The result of an empirical study about the financial crises and their effects on the economic growth and determinants of real sector adjustment after the financial crises are analyzed.The study shows that the financial crises have a short-run negative affect on the real sector of economy. Also the export orientation policies, external and internal environments, and financial depth have permanent and significant effects on the real sector adjustment after crises. It is depicted that the other variables have a temporary effects on the real sector adjustment after crises.
Akbar Komijani; Nahid Pourrostami
Volume 12, Issue 37 , February 2009, , Pages 39-59
Mohammad Bagher Beheshti; Reza Sadighnia
Volume 8, Issue 28 , October 2006, , Pages 39-60
Abstract
According to Kaldor, industry is an engine of economic growth. Following developed countries experiences, many developing countries have , selected industrialization strategy to boost their economic development. Iran was one of these countries that started industrialization policy in 1960s through an ...
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According to Kaldor, industry is an engine of economic growth. Following developed countries experiences, many developing countries have , selected industrialization strategy to boost their economic development. Iran was one of these countries that started industrialization policy in 1960s through an import substitution strategy.
The objective of this paper is to test the Kaldor's Engine of Growth, KEG, in Iranian economy. We apply cointegration and Granger casualty methods to test the Kaldor’s hypothesis in Iran using the data for the period 1959-2000.
The main finding of the research confirms KEG in Iranian economy.
Ali Asghar Banouei
Volume 5, Issue 14 , April 2003, , Pages 39-56
Abstract
In this article, the socio-economic analysis of the SAM multiplier, and its flexibility with respect to the aggregate Keynesian multiplier, extended Keynesian multiplier, Loentief's production multiplier and Miyazawa's combined multiplier will be briefly reviewed. Thereafter, we highlight the methodology ...
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In this article, the socio-economic analysis of the SAM multiplier, and its flexibility with respect to the aggregate Keynesian multiplier, extended Keynesian multiplier, Loentief's production multiplier and Miyazawa's combined multiplier will be briefly reviewed. Thereafter, we highlight the methodology of SAM in terms of endogenous and exogenous accounts with emphasis on the two main approaches of SAM multiplier: accounting and fixed price multiplier Matrices. With reference to the availability of the Iranian data, we observed that, due to lack of information, the fixed price multiplier could not be used, and therefore, the accounting price multiplier has been applied for socio and economic analysis. Secondly, the original form of the 1996 SAM is available in terms of commodity x industry and industry x commodity matrices. For our analytical purposes, it is therefore required that these matrices should be converted into final matrix either by industry technology and commodity technology assumptions in the SAM. The final results which for the first time reveal the socio-economic aspects of the Iranian economy in a consistent way, will be presented and analysed in three separate sections as follows: matrix multiplier for production, matrix multiplier for factor of production, and matrix multiplier for domestic institutions. The results of these matrices have been decomposed and analysed in terms of initial effects, truncated closed loop effects, othere ffects and closed loop effects.
Mostafa Karimzadeh
Volume 8, Issue 26 , April 2006, , Pages 41-54
Abstract
Financial market is one of the most important markets in each economy. Stock exchange has a considerable role in transformation of saving to investment. In major industrial countries, Up and down of the stock exchange not only influence their national economy but also can affect world economy. Theoretically ...
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Financial market is one of the most important markets in each economy. Stock exchange has a considerable role in transformation of saving to investment. In major industrial countries, Up and down of the stock exchange not only influence their national economy but also can affect world economy. Theoretically and practically it is known that there is a firm relation between monetary policy and the behavior of the stock exchange market. Hence, there should be a relation between monetary variables and stock price index. Study of these relationships in Iran’s economy is purpose of this article. Theoritical basis of the model rely upon portfolio and Fisher theories. Monetary variables such as M2, interest rate and foreign exchange rate can explain the fluctuations of stock price index. Long run relation for these variables is focus of our study. We tried to find a cointegration vector between these variables using ARDL approach. Results show that there is a firm and positive long run relation between TEPIX (Stock Price Index) and M2,and there is a negative relation between TEPIX and foreign exchange rate and there is a negative but weak relation between TEPIX and interest rate.
Mahmoud Khataie
Volume 1, Issue 2 , October 1996, , Pages 41-52
