Masoud Kiumarthi; Mohammad Taher Ahmadi Shadmehri; Mostafa Salimifar; Hamid Abrishami
Abstract
Analyzing the effects of energy and financial sanctions on the output gap of the economy of Iran is the aim of this study. To do so, a New-Keynesian DSGE model is used to design the structure of model. In this approach, by defining a shock, energy and financial sanctions is included into objective functions ...
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Analyzing the effects of energy and financial sanctions on the output gap of the economy of Iran is the aim of this study. To do so, a New-Keynesian DSGE model is used to design the structure of model. In this approach, by defining a shock, energy and financial sanctions is included into objective functions of the economic agents whereby the behavior of households in subsectors, consumption, capital accumulation and investment spending, and also the behavior of firm in production function and marginal cost are affected by energy and financial sanctions since 2011. The data in this study is quarterly for the period 1989 – 2014. To this end the output gap is computed by Kalman filter approach and other variables are filtered by Hodrick – Prescott method. Then by using Bayesian methods, the structural parameters are estimated, where, the results from MCMC Statistic, Gelman - Brooks statistic and comparing prior and posterior distribution functions indicate that the results are credible. Finally, the effects of energy and financial sanctions on the output gap and other variables have been analyzed by stochastic simulation. The results from simulation reveals that by imposing economic sanctions, investment spending, total consumption and the process of capital accumulation declines and the costs associated with output increased thereby the output gap in economy tends to increase. Moreover, from the results of variance decomposition, investment and inflation rate is more influenced by sanctions than other shocks.
Zahra Kahrizi; aziz maraseli; heshmatollah asgari
Abstract
Iran's provinces have experienced high inflationary pressures over the past few decades. This paper models the dynamics of inflation in terms of spatial effects between Iranian provinces using the hybrid Phillips New Keynesian Curve during the period (1392-1380). The results show that, the Phillips Keynesian ...
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Iran's provinces have experienced high inflationary pressures over the past few decades. This paper models the dynamics of inflation in terms of spatial effects between Iranian provinces using the hybrid Phillips New Keynesian Curve during the period (1392-1380). The results show that, the Phillips Keynesian curve is suitable for investigating the dynamics of inflation in Iran's provinces. Findings indicate that provinces focus on setting prices of their goods based on a combination of forward looking and backward looking rules, and that forward looking behaviors will have a stronger effect on the rate of inflation in the current period. Also in each province ,the output gap as representative of the actual variables has an effect on the inflation rate of its current period. Finally, considering the significance of spatial auto-correlation between Iran's provinces, output gap, expected and lagged inflation rates in adjacent provinces have negative effects on the current inflation rate of the neighboring provinces.
