Financial Economics
Ahmadreza Ahmadi; Mohammad Boushehri
Abstract
The expansion and deepening of the financial sector as one of the most important sectors of the economy of any country can affect tax evasion. In the present study, first, the relative size of tax evasion was calculated using the MIMIC method, which indicates an average of 8.1% in Iran's economy. Then, ...
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The expansion and deepening of the financial sector as one of the most important sectors of the economy of any country can affect tax evasion. In the present study, first, the relative size of tax evasion was calculated using the MIMIC method, which indicates an average of 8.1% in Iran's economy. Then, using the ARDL approach, the effect of the deepening of institutions and financial markets on tax evasion was investigated and tested separately using the indicators published by the International Monetary Fund (IMF) in the period from 1980 to 2022. The results of long-run estimates show that both the deepening of financial institutions and the deepening of financial markets have a negative effect on tax evasion. Second, in terms of size (absolute value), the inverse effect of the deepening of financial institutions on tax evasion is more than the deepening of financial markets. Among the control variables of the model, the tax burden has an inverted U shape and oil rent has a positive effect on tax evasion. Another finding is that in the period after the JCPOA (2017-2022) the amount of tax evasion has significantly decreased.
Political economy
Vahid Azizi; Bakhtiar Javaheri; Fateh Habibi
Abstract
AbstractEconomic growth and development, as the primary goals of any country, play a crucial role in improving living standards and promoting sustainable development. Efforts to achieve these goals, and consequently increase per capita income, can ensure the enhancement of economic and social well-being ...
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AbstractEconomic growth and development, as the primary goals of any country, play a crucial role in improving living standards and promoting sustainable development. Efforts to achieve these goals, and consequently increase per capita income, can ensure the enhancement of economic and social well-being of a nation. However, natural and political crises can pose significant obstacles to achieving such objectives. Natural disasters and economic sanctions, in particular, can have devastating effects on economic growth and development, leading to a decline in per capita income. Using the Dynamic Ordinary Least Squares, the present study aimed to examine the effect of economic sanctions and natural disasters on non-oil per capita income in Iran from 1980 to 2022. The findings showed that, in the long-term, increases in natural disasters and economic sanctions had contributed to a decline in per capita income in Iran. Additionally, environmental innovation and the interaction between innovation and natural disasters positively influenced per capita income. The results also indicated that factors such as the labor force, physical capital, and trade openness had contributed to improvements in per capita income. In light of the findings, it is recommended that Iran implement effective plans and policies to mitigate the effects of sanctions and natural disasters, promote environmental innovations, and strengthen the development of fixed capital and the labor force, aimed at ensuring the continued growth of per capita income.IntroductionIn recent years, Iran has become a prominent case study and focal point in discussions about sanctions within global research and academic circles. This attention stems from Iran’s status as a target of both multilateral and unilateral sanctions campaigns, which have had adverse effects on its economy. The sanctions have led to currency devaluation; severe budgetary, commercial, and financial deficits; reduced foreign investment, skyrocketing inflation, and rising poverty rates. Natural disasters, meanwhile, are large-scale catastrophic events that intermittently strike, causing extensive human and infrastructural damage that impacts societies and economies alike. Natural disasters inflict significant damage on infrastructure, property, and industries, leading to reduced production, business disruptions, damage to manufacturing facilities, and interruptions in transportation systems. Due to their unpredictability, natural disasters have a substantial impact on the economy. The current study aimed to explore whether natural and political disasters pose genuine obstacles to economic growth and development in Iran. The primary research question is: What are the effects of economic sanctions, natural disasters, and environmental innovation on per capita income in Iran’s economy?Materials and MethodsTo meet the objectives, the study used an experimental model as defined in logarithmic form based on Equations (1) and (2) below. (1) (2)Per capita income (Y) was considered as the dependent variable, while the independent variables included economic sanctions (ES), natural disasters (ND), environmental innovation (EI), physical capital (K), labor force (L), trade openness (TO), and an interaction variable (ND×EI). In line with the research objectives, time series data spanning from 1980 to 2022 were utilized. The research model was analyzed using the Dynamic Ordinary Least Squares (DOLS) estimator in EViews software.Results and DiscussionTo analyze the results, a unit root test was first conducted to evaluate the reliability of the data. The results showed that the variables of trade openness (TO) and economic sanctions (ES) were at a stationary level, while the variables of per capita income (Y), physical capital (K), labor force (L), environmental innovation (EI), and natural disasters (ND) could be stationary with one time difference. Next, the Bayesian Information Criterion (BIC) was used to determine the optimal lag length. The presence of long-term relationships among the variables was then tested using the Augmented Engle-Granger cointegration test and the Cointegrating Regression Durbin-Watson (CRDW) test, both of which indicated at least one long-term relationship among the variables. The DOLS method was then employed to estimate the research model (see Table 1). The findings revealed that economic sanctions (ES) had a significant and negative effect on per capita income (Y) in Iran’s economy. Specifically, a one percent increase in ES in Models 1 and 2 reduces non-oil per capita income by 0.108% and 0.063%, respectively. Additionally, the frequency of severe natural disasters (ND) had a significantly negative correlation with non-oil per capita income. A one percent increase in ND results in a reduction of 0.161% and 0.158% in non-oil per capita income. Conversely, environmental innovation (EI) had a significantly positive effect on per capita income, with a one percent increase in EI leading to a 0.032% rise in non-oil per capita income. The interaction variable (ND×EI) was also positive and significant, where a one percent increase in this variable results in a 0.025% increase in non-oil per capita income (Y). Furthermore, physical capital (K) had a significantly positive effect on non-oil per capita income. In this case, a one percent increase in K is associated with an increase in Y by 0.185% and 0.25% in Models 1 and 2, respectively. Labor force (L) also had a positive and significant effect on non-oil per capita income, with a one percent increase in L leading to an increase in Y by 0.611% and 0.518% in Models 1 and 2, respectively. Finally, trade openness (TO) had a positive effect on per capita income, as a one percent increase in TO results in a rise of 0.253% and 0.208% in non-oil per capita income.Table 1. Estimation Results of Research ModelsVariablesModel 1Model 2Coefficientst statisticCoefficientst statisticK0.1852.483**0.2505.140***L0.6113.887***0.5182.257***TO0.2534.462***0.2085.516***ES-0.108-2.119**-0.063-1.883*ND-0.161-4.946***-0.158-8.704***EI0.0322.359**--ND×EI--0.0254.745***C3.5332.028*4.2963.994***Note: ***, ** and * represent significance levels of 1%, 5% and 10%, respectively.Source: Research resultsConclusionThe research findings suggested that repeated political and natural disasters could drive a country and its economy into a period of stagnation. On the one hand, these events lead to the destruction of physical, human, and natural resources. On the other hand, they disrupt trade processes, halting the transfer of technology through imports and impeding the modernization of domestic industries. As a result, both outcomes contribute to a decline in per capita income. Moreover, the study showed that adopting environmental innovations could not only increase per capita income but also positively influence the relationship between natural disasters and per capita production, thus helping to mitigate the impact of such disasters. Therefore, investing in research, development, and innovation will strengthen the country’s ability to cope with and adapt to such challenges, while reducing risk levels. In conclusion, this study demonstrated that the political and natural disasters observed during the analyzed period hah negatively impacted the country’s economic growth and development, leading to a decrease in Iran’s per capita income.
Energy Economy
Saeed Rasekhi; Sara Ghanbartabar
Abstract
The utilization of natural resources, particularly energy, is essential for economic well-being. However, the increasing consumption of economic resources raises concerns about sustainable development. This study aimed to investigate the dynamic decoupling of economic growth, energy consumption, and ...
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The utilization of natural resources, particularly energy, is essential for economic well-being. However, the increasing consumption of economic resources raises concerns about sustainable development. This study aimed to investigate the dynamic decoupling of economic growth, energy consumption, and pollution in Iran from 2000 to 2020, employing the method proposed by Tapio (2005) and factor analysis on three levels of energy consumption (i.e., primary, final, and useful). The findings revealed that economic growth is often associated with negative decoupling, with this negative decoupling being more pronounced in useful and final energies compared to primary energy. Decomposing energy consumption further confirmed negative decoupling in various energy components. Additionally, the study confirmed weak decoupling between energy consumption and pollution (CO2 emissions), with stronger negative decoupling observed at lower energy levels. Furthermore, the decoupling of economic growth and pollution closely mirrors the decoupling of economic growth and energy consumption. The negative decoupling can be attributed to the inefficiency in energy consumption, limited access to new technologies, and the lack of appropriate structures due to the absence of a specific strategy for sustainable development. The research recommends the prioritization of energy efficiency across different energy levels as well as the investment in infrastructure and energy technology.IntroductionEconomic growth is intricately linked to the consumption of natural resources, with these scarce and costly resources serving as the primary catalyst for the development and acceleration of economic growth process in modern societies (Song et al., 2019; Song et al., 2020; Zhang et al., 2018). Meanwhile, the production and consumption of energy resources are associated with significant social costs and diminished welfare (Feng et al., 2020a; Feng et al., 2020b; Li et al., 2018; Rjoub et al., 2021; Wang et al., 2020). The world grapples with the challenge of balancing economic development and energy consumption (Bradshaw, 2010). Despite the looming threat of global warming, many countries, particularly developing nations, have prioritized economic development over environmental conservation (Shah et al., 2016). Consequently, decoupling energy consumption from economic growth is widely recognized as a significant achievement in the global effort to combat climate change and mitigate adverse environmental effects. The experience of developed countries instill hope for overcoming resource scarcity and growth limitations, as well as fostering green and sustainable economic growth. While relative decoupling has been achieved in numerous countries, absolute decoupling remains challenging and seemingly unattainable (Hickel & Kallis, 2020). In this respect, the present study aimed to scrutinize the decoupling dynamics of economic growth, energy consumption, and pollution in Iran from 2000 to 2020, employing the method proposed by Tapio (2005) as well as factor analysis across three energy levels.Materials and MethodsThe study followed the method proposed by Tapio (2005) in order to calculate the decoupling between energy consumption and economic growth. First, the decoupling elasticity coefficient was calculated as outlined below: (1)e(E) is the elasticity coefficient of decoupling between economic growth and energy consumption. ∆E represents changes in energy consumption during the time period under study. E (t-1) indicates energy consumption in the base year. ∆G refers to changes in GDP per capita during the time period, and G (t-1) indicates the GDP per capita in the base year (Wang & Zhang, 2021). In the method proposed by Tapio (2005), eight decoupling states can be distinguished (Figure 1).Figure 1. Decoupling states The present study conducted a more comprehensive analysis of decoupling by using factor analysis at various energy levels. In this line, the consumption across three energy levels (primary, final, useful) was divided into three distinct effects: activity (production rate), structural (change of economic structure), and intensity (technology effect). The logarithmic mean division method and each of these effects were used as follows: (2) (3) (4) (5)The study also divided economic activities into several categories: agriculture, services, industry, residential, and transportation. This categorization aligns with the most feasible separation based on the available data and statistical classifications within domestic data sources. In Iran’s energy balance, although household, public, and commercial sectors are categorized under one group, these sectors were individually reported, and the residential sector was distinguished from the commercial and public sector (as the service sector).Results and DiscussionFigure 2 presents the decoupling dynamics of Iran’s economic growth, energy consumption, and carbon dioxide emissions during 2000–2020. The figure is divided into two parts focused on various energy levels for different components: the first part depicts the decoupling of economic growth and energy consumption, while the second part shows the decoupling of energy consumption from carbon dioxide emissions. As show in Figure 2, the decoupling of economic growth and carbon dioxide follows a pattern similar to and influenced by the decoupling process between economic growth and fossil energy consumption. The decoupling of economic growth and fossil energy consumption aligns with changes in decoupling at different energy levels (primary, final, and useful), reflecting the significant share of fossil energy in Iran’s overall energy consumption. Figure 2 also highlights the weak decoupling between fossil energy consumption and carbon dioxide, which can be attributed to the nature of fossil fuel pollution. Consequently, the decoupling of economic growth from carbon dioxide is influenced by fossil energy consumption.The first part of Figure 2 reveals various forms of negative decoupling (expansive negative, weak negative, and strong negative) concerning economic growth and energy consumption. Correspondingly, the second part indicates a generally weak decoupling for different energy levels and carbon dioxide emissions. Within the energy consumption components, the intensity component exhibits strong decoupling, though it fluctuates, sometimes displaying positive decoupling (weak, recessive, and strong) and occasionally negative decoupling (expansive and strong negative)—which can be caused by the drop in technology. This finding aligns with the second part of Figure 2, where the decoupling of the intensity component and carbon dioxide experiences fluctuations. Notably, the structural component in the first part of Figure 2 exhibits the strongest negative decoupling from economic growth, signifying a change in Iran’s economic structure that has exacerbated the decoupling between energy consumption and economic growth. However, the decoupling of the structural component and carbon dioxide, as depicted in the second part of Figure 2, remains within the range of weak but fluctuating decoupling.Finally, the first part of Figure 2 indicates that economic growth is often associated with negative decoupling (expansive and strong negative) from total energy consumption. Despite weak decoupling in initial periods and subsequent fluctuations, the last two years show strong decoupling between total energy consumption and carbon dioxide. Overall, Figure 2 illustrates a fluctuating trend in the decoupling of economic growth and energy consumption over time, predominantly featuring negative decoupling, which corresponds to the decoupling trend between energy consumption and carbon dioxide. Among the components of energy consumption, the intensity component exhibits strong negative decoupling, while the structural component displays weak decoupling, both characterized by fluctuating patterns. This fluctuation may stem from the absence of a specific plan and strategy to decouple economic growth, energy consumption, and carbon dioxide.Figure 2. Decoupling of economic growth, energy consumption, and carbon dioxide emission in Iran during 2000–2020 Expansive negative decoupling decoupling ExpansiveWeak decouplingStrong decouplingRecessive decoupling Recessive coupling Weak negative decoupling Strong negative decouplingConclusionUsing the method proposed by Tapio (2005) and factor analysis across three energy levels, the present study investigated the dynamics of decoupling economic growth, energy consumption, and pollution in Iran during 2000–2020. The findings underscored challenges faced by the policy aimed at reducing energy consumption, which is primarily due to the dependency of Iran’s economy on energy. Specifically, the research showed the dependency of Iran’s economy on energy on energy consumption across all three levels: primary energy, final energy, and useful energy. Moreover, the results highlighted a low degree of energy efficiency, particularly at higher energy levels (secondary and useful). Considering the relation between environmental pressure and restrictions on economic growth, there is a pressing need to address energy intensity and energy efficiency to strike a balance between economic growth and energy consumption. The observed negative decoupling in structural, intensity, and activity effects suggests a lack of a specific strategy in Iran’s economy concerning the decoupling and balance between energy consumption and economic development. In light of these findings, it is imperative to focus on enhancing energy consumption efficiency across diverse energy levels. Additionally, the study recommends prioritizing more effective decoupling in sustainable development policies concerning energy consumption, economic growth, and pollution.
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.
Macroeconomics
Zana Mozaffari; Bakhtiar Javaheri
Abstract
Human capital is a hidden variable. In different economic studies, various proxies have been used as a proxy for human capital, including the average literacy index, the number of graduates or the average number of years of schooling. This study will review the economic literature first, and then the ...
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Human capital is a hidden variable. In different economic studies, various proxies have been used as a proxy for human capital, including the average literacy index, the number of graduates or the average number of years of schooling. This study will review the economic literature first, and then the three pillars of human capital index including education variables, skills and health will be analyzed for the Iranian economy. In addition, by using fuzzy approach and Mamdani Fuzzy Inference System, the human capital index in the Iranian economy during the 1981-2019 period will be estimated. The results of this calculation shows that during the period under study, the human capital index has continuously grown; in 1981, the index was estimated at 0.13 and 0.59 in 2019. On this basis, it can be stated that human capital in the Iranian economy during the 1981 to 2019 period has grown significantly. This accumulation of human capital can be seized in the production processes, leading to increase in production and productivity..
Vahid Dehbashi; Teymour Mohammadi; Abbas Shakeri; Javid Bahrami
Abstract
The aim of this paper is to investigate the responses of stock, gold and foreign exchange markets in Iran, with an emphasis on the spillover volatility effects. For this purpose, the rate of return of variables is calculated by using the daily data of Tehran Stock Exchange price index, exchange rate ...
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The aim of this paper is to investigate the responses of stock, gold and foreign exchange markets in Iran, with an emphasis on the spillover volatility effects. For this purpose, the rate of return of variables is calculated by using the daily data of Tehran Stock Exchange price index, exchange rate and gold price during the period of 25 March 2009 to 18 July 2018. The estimated model investigates volatility spillovers in the markets using the VAR-BEKK-GARCH approach. The impulse-response functions are estimated by including the possibility of the asymmetry of the coefficients of the cross terms of the errors in MGARCH-type equations. The results show two-way volatility spillover between foreign exchange and stock markets, one-way volatility spillover from the foreign exchange to gold markets and one-way volatility spillover from the gold to stock markets. Moreover, the findings obtained from the impulse-response functions confirm the spread of uncertainty among the financial markets in Iran.
Jalal Montazeri Shoorekchali
Abstract
Financial crises, along with the negative and destructive effects of the debt stocks on the economy of countries with the national debt, have caused the "economic effects of the public debt stocks problem," and has become a controversial issue in the public sector economics literature. Using a Smooth ...
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Financial crises, along with the negative and destructive effects of the debt stocks on the economy of countries with the national debt, have caused the "economic effects of the public debt stocks problem," and has become a controversial issue in the public sector economics literature. Using a Smooth Transition Regression (STR) model, this paper investigates the asymmetric impact of the size of government debt - the ratio of government debt to the central bank to GDP - on economic growth in Iran during 1973-2017. The findings showed that the size of government debt to the central bank in a two-regime structure, with two thresholds, affected economic growth by 4.40% and 28.98%. At low levels of debt (years that the size of government debt to central bank is less than 4.4%) and high levels of debt (years that the size of government debt to central bank is greater than 4.40% and less than 28.98%), government borrowing from the central bank has had a negative and positive effect on economic growth, respectively. Finally, contrary to the expectations, during the period 1980-1991 (years that the size of government debt to the central bank is greater than 28.98%), the amount of government debt to the central bank has positively affected economic growth. This positive impact can be due to the specific features of the revolution and war periods in Iran, such as reducing crowding-out effects, the significant gap between real and potential production, and the more efficient cost management during years.
Mohammad Reza Pakravan-Charvadeh; Seyyed Safdar Hosseini; Saeed Nori Naeini
Abstract
Improving food security status through socio-economic determinants is always important at the household level. In this study, after assessing the food security level of households in urban and rural areas of Khuzestan province, associated factors including economic, social, and racial ...
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Improving food security status through socio-economic determinants is always important at the household level. In this study, after assessing the food security level of households in urban and rural areas of Khuzestan province, associated factors including economic, social, and racial with food security were identified in 1397. To achieve the goals, 1876 and 1495 questionnaires were collected in urban and rural areas respectively. The logistic regression model was used to identify effective factors. The results showed that 63 % and 68 % of households in urban and rural areas face food insecurity respectively. Hamidiyeh county with 18 %, Omidieh 25 % , and Dezful 28 % had the least percent of food secured households in the urban areas of Khuzestan province, respectively. Also, the cities of Shadegan with 13 %, Izeh with 15 %, and Mahshahr port with 18 % had the least percent of food security households in rural areas, respectively. The results of the quantitative estimated model in the present study showed that employment of the head of the household, income, number of rooms and personal car ownership were significantly and directly associated with food security in urban and rural areas of Khuzestan province. Therefore, due to the weakness of income policies which are applying as the only ways to ameliorate food security status in Iran, paying close attention to socio-economic factors related to improving the level of household food security before any intervention is necessary.
Mahdie Rezagholizade; Malihe keyvanpor
Abstract
One important aspect of financial development in oil-exporting countries is how to allocate oil income during periods of oil price fluctuations. Financial development in these countries affects their current accounts in two ways: directly through the impact on savings and investment and indirectly ...
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One important aspect of financial development in oil-exporting countries is how to allocate oil income during periods of oil price fluctuations. Financial development in these countries affects their current accounts in two ways: directly through the impact on savings and investment and indirectly through the impact on the relationship of oil prices and current account. Considering the importance of this issue, this study investigates the role of financial development in the relationship between oil price and current account using a nonlinear Smooth Transition Regression model (STR) during the period of 1978-2016 in Iran. Based on the relevant tests, it is concluded that there is a nonlinear relationship between the current account and world oil price. Financial development is chosen as the best transition variable and the nonlinear Smooth Transition Regression model with a two-regime logistic transition function (LSTR1) has been chosen as the best model for this relationship. The results of estimation show that the oil price appearing in the form of a two-regime structure with a threshold level (1.5386) in the first regime (when financial development is less than it’s threshold value (1.5386)) has a positive and significant effect on Iran’s current account; The intensity of this positive effect increases by crossing the threshold level entering to the second regime (when financial development is higher than its threshold value (1.5386).
Mahdieh Rezagholizadeh; Amirhossein Alami
Abstract
Tax evasion constitutes a major component of underground activities and development of financial sector -as one of the most important sectors in every country can affect its size. Considering the importance of this issue, this study tries to investigate the relationship between financial development ...
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Tax evasion constitutes a major component of underground activities and development of financial sector -as one of the most important sectors in every country can affect its size. Considering the importance of this issue, this study tries to investigate the relationship between financial development and tax evasion and provide an answer to this question: can financial development in Iran reduce tax evasion? This study estimates the volume of tax evasion in Iran by using multiple-indicators -multiple causes (MIMIC) model and maximum likelihood method in AMOS software, for the period of 1978-2016. Then the effect of financial development on tax evasion is investigated by using ARDL Bounds test method. The results show that despite some fluctuations, volume of tax evasion has been generally increasing over the underlying period. The results of the estimation of the effect of financial development on the tax evasion indicate that financial development in Iran in long-run and short-run (with one lag) has a negative and significant impact on the tax evasion. Also, findings show that an increase in inflation, increases tax evasion and increase in GDP reduces tax evasion.
mohammad alizadeh; Seyed Ehsan Hosseinidoust; Abolghasem Golkhandan
Abstract
From a financial perspective, decentralization is a transfer of resources from the central government to local governments. Fiscal decentralization policies can lead to more FDI attraction by increasing the share of provincial government funding to local infrastructure.Accordingly, the major purpose ...
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From a financial perspective, decentralization is a transfer of resources from the central government to local governments. Fiscal decentralization policies can lead to more FDI attraction by increasing the share of provincial government funding to local infrastructure.Accordingly, the major purpose of this study is to evaluate the long run and short run impact of fiscal decentralization on FDI in Iran during the period 1992-2014. For this purpose the three indicators of fiscal decentralization of revenue, fiscal decentralization of expenditures, fiscal decentralization of autonomy power and also some control variables including inflation, exchange rate fluctuations, and degree of trade openness have been used.In order to estimate the model, the Johansen-Juselius method and Vector Error Correction Model (VECM) have been applied. Based on the results of the model, all three fiscal decentralization indicators increase FDI in the long run and in the short run. Therefore, providing the necessary conditions for the expansion of fiscal decentralization can help to promote the FDI level in Iran.Also, both in the long run and the short run, inflation and exchange rate fluctuations have a negative effect, and the degree of trade openness has a positive effect on FDI.
Hassan Heidari; Arash Refah-Kahriz
Abstract
Attitude towards the role of government and reasons for the existence of government have experienced several changes and revisions during the last century. Attitude changes alter the duties and responsibilities assigned to the government and thus change the size and composition of public expenditure. ...
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Attitude towards the role of government and reasons for the existence of government have experienced several changes and revisions during the last century. Attitude changes alter the duties and responsibilities assigned to the government and thus change the size and composition of public expenditure. In the context of these attitudes, there are factors that could explain the changes in the size and the growth of government and consequently the government intervention in the economy over time and among different countries. This study investigates the relationship between government size and macroeconomic variables including economic growth, growth of oil revenues, growth of tax revenues, inflation in Iran using seasonal data during the period of 1990:1 – 2014:4 by applying Markov Regime Switching model. The results show that in the selected model consisting of two regimes with different government sizes, economic growth has a significant negative impact on government size in both regimes of zero and one. But inflation has different effects on government size: it has a negative effect in the regime zero (smaller government) and a positive effect in the regime one (bigger government). Moreover, the growth of oil revenues has a positive effect in both regimes, but the growth of tax revenues has a positive effect only in the regime one. Also, the results indicate that the government size in Iran has often been in the regime one with bigger government size and it is predicted that bigger government will be more sustainable than smaller government.
Abdorasoul Sadeghi; Seyed Komail Tayebi
Abstract
Due to the historical importance of inflation in the Iranian economy and its serious effects on the society, the present study has explored the impacts of international sanctions and other effective factors on the inflation rate in Iran during 1981-2014. To this end, this paper has specified an econometric ...
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Due to the historical importance of inflation in the Iranian economy and its serious effects on the society, the present study has explored the impacts of international sanctions and other effective factors on the inflation rate in Iran during 1981-2014. To this end, this paper has specified an econometric model of inflation rate, which has been estimated by the ARDL method using relevant time series data including the above period. The empirical results obtained indicate that the international sanctions have had direct and significant effects on the inflation rate through changes in exchange rate and budget deficit. Additionally, exchange rate, money liquidity and deposit interest rate have had positive and significant effects on the inflation rate, while oil revenues and tax earnings have influenced indirectly and significantly Iran’s inflation rate over the period.
Saman Ghaderi
Abstract
This study examines the hysteresis effect of currency substitution in Iran using a model of money-in-the-utility function with two currencies (home and foreign). In this respect, Divisia monetary aggregates has been used for calculating the dollars in circulating. The bounds testing approach to the analysis ...
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This study examines the hysteresis effect of currency substitution in Iran using a model of money-in-the-utility function with two currencies (home and foreign). In this respect, Divisia monetary aggregates has been used for calculating the dollars in circulating. The bounds testing approach to the analysis of level relationship proposed by Pesaran et al. (2001) and Autoregressive Distributed Lag (ARDL) model have been used for Iranian quarterly data during 1990- 2014. The results indicate that there is evidence supporting the existence of the hysteresis effect of currency substitution in Iran. In other words, currency substitution process is irreversible. Therefore, it is suggested that the central bank consider the effect of the hysteresis of dollarization phenomenon on monetary policy and the purpose of controlling inflation and reducing exchange rate volatility as the main reasons of currency substitution, continues to be a priority for economic policy.
Esmaiel Abounoori; Milad Shahrazi
Abstract
In this research, the absolute poverty line based on the food poverty line is estimated using mathematical programming approach concerning urban area prices during February 2015. We first have determined a basic food basket including 76 common and important food items. Second, we have identified the ...
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In this research, the absolute poverty line based on the food poverty line is estimated using mathematical programming approach concerning urban area prices during February 2015. We first have determined a basic food basket including 76 common and important food items. Second, we have identified the basic human nutrients needs for the survival. Then we have considered the amount of nutrients in each 100 grams of the 76 food items. After that, we have collected the prices of each 100 grams of the food items using a categorized sampling covering urban areas of Mazandaran province. Mathematical Programme is constructed using the total cost function as the target function along with constraints of calorie and eight nutrients needs. The model has been solved by Simplex method and, the food poverty line is estimated. Then, using the Orshansky method the absolute poverty line is calculated. The results show that the food poverty line and the absolute poverty line for a household with four people in Mazandaran urban areas during February 2015 were about 311,000 and 1,305,000 Tomans(10 Rials), respectively.
Seyyed Safdar Hosseini; Mohammad Reza Pakravan Charvadeh; Habibollah Salami
Abstract
One of the main approaches to achieve food security is redistribution measures such as the subsidy reform program with the aim of social justice and improved welfare of low-income groups. In this study, we analyzed the effect of the implementation of targeted subsidies program on food security in Iran ...
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One of the main approaches to achieve food security is redistribution measures such as the subsidy reform program with the aim of social justice and improved welfare of low-income groups. In this study, we analyzed the effect of the implementation of targeted subsidies program on food security in Iran during 2005-2012. A model of food security was estimated after calculating the adult’s energy intake through household’s consumption information. We found an inverse relationship between the subsidy reform program and food security among Iranian households. Due to this program, food prices increased and households’ real income decreased. The results of these changes are the increased cost of living and decreased share of income spent on food.
Zahra Dehghan Shabani; Ebrahim Hadian; Faezeh Nasirzadeh
Abstract
Economic theory has emphasized the important role of human capital on national and regional economic growth. The present study aimed to analyze the effect of the composition of human capital on economic growth in Iranian provinces. We estimated a Spatial Dynamic Panel Data model by using Generalized ...
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Economic theory has emphasized the important role of human capital on national and regional economic growth. The present study aimed to analyze the effect of the composition of human capital on economic growth in Iranian provinces. We estimated a Spatial Dynamic Panel Data model by using Generalized Method of Moments technique for 28 Iranian provinces over the period 2001-2011.
The results indicated that tertiary and primary and secondary education had positive and significant effects on economic growth. Also, the human capital structure had an inverse-U-shape effect on economic growth. In other words, growth is increasing in the human capital structure at low levels of the human capital structure, but the relation turns negative once the human capital structure exceeds a critical value.
Hosein Mohammadi; Sayed Hosein Saghaian; Amirhosein Tohidi
Volume 20, Issue 65 , February 2016, , Pages 159-184
Abstract
Exchange rate pass-through is one of the most important issues in the international economic studies. Determining the degree of exchange rate pass-through can be used to define the effectiveness of foreign policy, market structure and exporters behavior. The main objective of this study is to investigate ...
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Exchange rate pass-through is one of the most important issues in the international economic studies. Determining the degree of exchange rate pass-through can be used to define the effectiveness of foreign policy, market structure and exporters behavior. The main objective of this study is to investigate the exchange rate pass-through to export prices of Iranian pistachios during the period 1961-2011. In the previous studies, the exchange rate pass-through was assumed to be fixed during different years. This assumption is not consistent with reality, because many factors can influence the exchange rate pass-through. In this study, sensitivity analysis in the framework of artificial neural network is used to address this shortcoming. The results shows that exchange rate pass-through to Iran's pistachio export prices has been more than 70 percent, and its trend has been periodic. Furthermore, the results showed that there is a direct relationship between exchange rate fluctuations and Iranian pistachio export prices. Thus, by reducing exchange rate volatility, it is possible to supply pistachio with lower prices to the world markets. Considering the high elasticity of demand for the Iranian pistachio prices, a reduction in prices would increase revenues of exporters. Incidentally, given the high elasticity of export demand for Iran's pistachio, the revenues from the export of this product can be increased by reducing the cost of pistachio production.
Hassan Heidari; Parisa Jouhari Salmasi
Abstract
Low and stable inflation with sustainable growth is the first objective of any monetary authority. To achieve this prime goal, reliable forecast of macroeconomic variables play an important role. This paper investigates the forecasting performance of BVAR models with different priors for Iranian economy. ...
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Low and stable inflation with sustainable growth is the first objective of any monetary authority. To achieve this prime goal, reliable forecast of macroeconomic variables play an important role. This paper investigates the forecasting performance of BVAR models with different priors for Iranian economy. For this purpose we use BVAR approach with Gibbs sampling for quarterly data of the Iranian economy from 1989:Q1 to 2007:Q4. The main advantage of this paper is using Gibbs Sampling to estimate BVAR models and use of Quasi BVAR models with Normal Wishart and Minnesota priors in order to compare forecast accuracy of the macroeconomic variables. Comparison of the BVAR with Gibbs Sampler and Quasi BVAR models in this experience shows that the value of MSFE in predicting macroeconomic variables for the four ahead period forecasts in BVAR model with Gibbs algorithms is less than Quasi BVAR models. Generally BVAR model with Gibbs sampling algorithms performs better than Quasi BVAR models in forecasting.
Hassan Dargahi; Mohammadreza Mazloumpour
Volume 19, Issue 61 , February 2015, , Pages 31-62
Abstract
The Impact of micro-credits on household’s poverty gap is considered as one of the most important social and economic issues. In this research, the socio- economic characteristics of the borrowing households are identified by using a Logit model, based on the urban and rural household budget survey ...
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The Impact of micro-credits on household’s poverty gap is considered as one of the most important social and economic issues. In this research, the socio- economic characteristics of the borrowing households are identified by using a Logit model, based on the urban and rural household budget survey data for 2011. Then, the impact of micro-credits on poverty gap of poor households is examined by estimating regression models. The result of the Probit analysis indicates that the coefficients of the age of household head, employment of the household head, household size, and urbanization are significantly positively related to households’ access to credit. However, the coefficient of household expenditure is negatively related to households’ access to credit. This implies that the low-income household is more likely to have not access to micro-credits. Also, the regression analysis shows that the access to micro-credits is not a significant explanatory variable for poverty gap of the poor households. This indicates the micro-credits has no impact on the poverty reduction of the poor households.
Saeed Rasekhi; Elnaz Behnia
Volume 18, Issue 55 , July 2013, , Pages 1-16
Abstract
Since the 1970s, international political economic theorists have emphasized on the role of domestic factors, such as domestic active groups, policies and macro-economic indicators, to explain the trade protection trends. Empirical studies have often verified this view. This paper examines ...
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Since the 1970s, international political economic theorists have emphasized on the role of domestic factors, such as domestic active groups, policies and macro-economic indicators, to explain the trade protection trends. Empirical studies have often verified this view. This paper examines the determinants of tariff protection in Iran’s manufacturing industries by using panel data for the period 2001-2007.This research also investigates the effects of intra industry trade on tariff protection. The results indicate that value added and the ratio of production to import affect the tariff protection in Iran’s manufacturing industries. Also, intra-industry-trades and their type, i.e. horizontal and vertical intra-industry trade, have negative effects on the protection. Based on the obtained results, we suggest that domestic industries activities in both domestic and foreign markets as well as intra-industry trade and competitiveness of trade should be increased.
Morteza Khorsandi; Karim Eslamloueyan; Hossein Zonnoor
Volume 17, Issue 51 , July 2012, , Pages 43-70
Abstract
The main goal of this paper is to derive an optimal rule for monetary policy in Iran. To do so, we estimate the monetary transmission equations and derive the optimal rule by using the dynamic programming method. Our dynamic optimization problem is to minimize the central bank's loss function subject ...
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The main goal of this paper is to derive an optimal rule for monetary policy in Iran. To do so, we estimate the monetary transmission equations and derive the optimal rule by using the dynamic programming method. Our dynamic optimization problem is to minimize the central bank's loss function subject to the transmission mechanism equations. We have modified our loss function to include inflation persistence as well. Using the growth rate in broad definition of money, M2 as our control variable, we estimate the transmission mechanism equations and derive the optimal monetary rule. Our findings indicate that the optimal monetary policy rule can decrease welfare losses and hence is a welfare improving policy. This means that the use of monetary rule is superior to discretionary policy in the case of Iran.
Hassan Heydari
Volume 17, Issue 50 , April 2012, , Pages 65-81
Abstract
This paper investigates the use of different priors to improve the inflation forecasting performance of BVAR models with Litterman’s prior. A Quasi-Bayesian method, with several different priors, is applied to a VAR model of the Iranian economy from 1981:Q2 to 2007:Q1. A novel feature with this ...
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This paper investigates the use of different priors to improve the inflation forecasting performance of BVAR models with Litterman’s prior. A Quasi-Bayesian method, with several different priors, is applied to a VAR model of the Iranian economy from 1981:Q2 to 2007:Q1. A novel feature with this paper is the use of g-prior in the BVAR models to alleviate poor estimation of drift parameters of Traditional BVAR models. Some results are as follows: (1) our results show that in the Quasi-Bayesian framework, BVAR models with Normal-Wishart prior provides the most accurate forecasts of Iranian inflation; (2) The results also show that generally in the parsimonious models, the BVAR with g-prior performs better than BVAR with Litterman’s prior
Hamid Sepehrdoust
Volume 17, Issue 50 , April 2012, , Pages 139-157
Abstract
Iran has been host to the largest number of migrants in the form of Afghan refugees since 1982. These refugees have been permitted to find jobs in Iranian labour market, particularly in the labour intensive markets like manual jobs and construction activities which could not easily be filled by Iranian ...
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Iran has been host to the largest number of migrants in the form of Afghan refugees since 1982. These refugees have been permitted to find jobs in Iranian labour market, particularly in the labour intensive markets like manual jobs and construction activities which could not easily be filled by Iranian workers. The research provides a critical review of the impact of migrated Afghan labourers on the efficiency performance of the construction sector of Iranian economy during the period 2006 – 2009, using data envelopment analysis. Results show that, despite the high costs incurred by Iran as host to more than one million refugees, it also benefited from the presence of Afghans. Statistical analysis shows that there is a significant difference between the efficiency scores of the provinces using more migrant Afghan labour force and those having less concentration of such labourers in construction activities. That means most of the technically efficient states in construction activities have the opportunity to employ Afghan workers, since they used to be a very competitive and flexible labour force with unattractive payment. As a result the repatriation program of the Iranian government on Afghan refugees could be limited because of the low levels of substitution among Afghan and Iranian workers in the field of construction.
Hamid Kordbacheh; Leila Pordel Nooshabadi
Volume 16, Issue 49 , February 2012, , Pages 117-150
Abstract
This paper estimates a dynamic panel model to examine the bank-specific and macroeconomic determinants of non-performing loans in Iranian banking sector using a sample of 12 banks over the period of 2002-2008. The findings of this paper show that prudential behaviour, size and ownership status of banks ...
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This paper estimates a dynamic panel model to examine the bank-specific and macroeconomic determinants of non-performing loans in Iranian banking sector using a sample of 12 banks over the period of 2002-2008. The findings of this paper show that prudential behaviour, size and ownership status of banks are the main statistically significant bank-specific factors of non-performing loans. For robustness of the empirical results, the model has been estimated with alternative indexes of business cycle variable. The findings of the estimated models show that the macroeconomic conditions have significant impact on the non-performing loans in the sample.
