Iranian Journal of Economic Research

Abstract Uncertainty is a key source of macroeconomic fluctuations and has attracted increasing attention, particularly since the 2008 global financial crisis. Understanding cross-country uncertainty spillovers is therefore essential for interpreting economic and political developments. This study examined uncertainty spillovers among 16 OPEC+ members and 16 European countries, representing one of the major oil- and gas-importing blocs. The analysis used the frequency connectedness approach within a quantile vector autoregression (QVAR) framework and monthly data spanning 2008–2025. The findings revealed five main results. First, total connectedness within both groups generally exceeded 70% and varied across time horizons. Second, within OPEC+, Qatar and Mexico were the primary transmitters of uncertainty, whereas Angola and Azerbaijan were the main receivers. In Europe, Austria and the United Kingdom would act as transmitters, while the Netherlands and Spain were receivers. Third, countries’ net transmitter and receiver roles would differ between short- and long-term horizons. Fourth, the predominance of long-term connectedness in Europe suggested that uncertainty was transmitted primarily through fundamental macroeconomic channels rather than temporary shocks. Fifth, within the OPEC+ network, Iran was most strongly affected by uncertainty originating in Oman and Mexico, while exerting its strongest spillover effects on Oman, Azerbaijan, and Saudi Arabia. By distinguishing between short- and long-term connectedness, the proposed approach can provide a valuable tool for assessing economic resilience and identifying horizon-specific patterns of uncertainty transmission. Concerning policymaking and policymakers, these findings offer deeper insights into the mechanisms underlying uncertainty spillovers and the interconnected roles of individual countries.
Introduction
Global uncertainty has emerged as a major driver of systemic risk in recent decades, particularly in the aftermath of the 2008 global financial crisis, the COVID–19 pandemic, and escalating geopolitical tensions. The global energy market serves as a vital link between OPEC+ countries, which are major energy suppliers, and European countries, which constitute a key energy-importing bloc—thus creating a complex network of interdependence. However, the existing literature has relied predominantly on mean-based models, often overlooking the heterogeneity of uncertainty spillovers across different time horizons. To address this research gap, the present study aimed to examine the network structure of uncertainty spillovers between these two blocs by using an advanced quantile-frequency approach. Identifying the channels through which uncertainty propagates and assessing the persistence of shocks over short- and long-term horizons are essential for understanding the structural resilience of macroeconomic systems and energy markets amid global uncertainty and economic turbulence.
Materials and Methods
The present study used a quantile-frequency connectedness framework to examine global uncertainty spillovers. First, a quantile vector autoregression (QVAR((p))) model was estimated to capture transmission mechanisms beyond the conditional mean and across different quantiles. Generalized forecast error variance decomposition (GFEVD) was then employed to construct directional spillover matrices. Second, the moving-average representation was used to decompose forecast error variance across two frequency horizons: (1) the short-term band , capturing transitory fluctuations over a horizon of 2–12 months, and (2) the long-term band , capturing persistent structural interdependencies over the horizons exceeding 12 months. System-wide network metrics—including the Total Connectedness Index (TCI), directional spillovers (TO and FROM), net positions (NET), and net pairwise directional connectedness (NPDC)—were calculated across time and frequency domains. To capture dynamic interdependencies under typical macroeconomic conditions, the study evaluated the empirical model at the median quantile , using a 120-month rolling window for a sample of 16 OPEC+ economies and 16 European economies over the period 2008–2025.
Results and Discussion
Empirical results from the quantile-frequency connectedness framework revealed substantial systemic interdependence across the economies examined, with average TCI values of 74.00% for OPEC+ and 76.87% for Europe. The spectral decomposition indicated that uncertainty transmission was predominantly a high-frequency, transitory phenomenon in both groups. Short-term connectedness, measured over a 2–12-month horizon, accounted for 51.50% in OPEC+ and 48.79% in Europe. These values exceeded long-term connectedness, which captured persistent structural spillovers and stood at 22.55% and 28.09%, respectively. Nevertheless, time-varying rolling-window estimates revealed sharp increases in connectedness during major systemic crises, particularly the COVID–19 pandemic and the 2022 Russia–Ukraine conflict, with connectedness in Europe approaching 100%. During these episodes, low-frequency, persistent shocks temporarily emerged as the dominant transmission channel.
Directional spillover measures (i.e., NET and NPDC) further revealed pronounced asymmetries in the transmission of uncertainty. Within OPEC+, major energy suppliers—particularly Qatar, Mexico, Saudi Arabia, and Venezuela—emerged as persistent net transmitters of shocks, whereas Algeria, Azerbaijan, and Iran were identified as net shock receivers, reflecting their exposure to export vulnerabilities and geopolitical sanctions. Within the European network, the United Kingdom, Austria, Belgium, and Ukraine would act as major net shock transmitters, while energy-importing economies such as the Netherlands, Spain, and Turkey represented the most vulnerable net shock absorbers.
Finally, the system-wide clustering of all 32 economies led to the identification of four highly interconnected clusters, highlighting the role of geopolitical and energy-related epicenters, (particularly Ukraine and Algeria) in transmitting primary supply shocks to the European market. These shocks would subsequently be amplified and redistributed through key Western European financial hubs (notably France and Italy), underscoring the interconnected nature of energy-market and financial transmission channels.
Conclusion
Using a QVAR framework, the current study examined dynamic global uncertainty spillovers across 16 OPEC+ and 16 European economies over the period 2008–2025. The findings reveal substantial systemic interdependence across countries, with total connectedness exceeding 70% in OPEC+ and approaching 100% in Europe during major systemic crises after 2020, particularly the COVID–19 pandemic and the Russia–Ukraine war. Nevertheless, in economies such as Algeria, Venezuela, Austria, and Ukraine, uncertainty appeared to be driven primarily by domestic macroeconomic conditions, structural characteristics, and geopolitical factors rather than by external spillovers. Moreover, Ukraine, Algeria, Venezuela, Malaysia, and Italy emerged as major net transmitters of systemic shocks, reflecting their strategic positions within global energy, trade, and financial networks.
Crucially, the roles of individual economies in shock transmission vary across frequency horizons, underscoring the inadequacy of static policy frameworks. From a policy perspective, economies identified as net shock transmitters should prioritize multilateral policy coordination and develop proactive risk-mitigation mechanisms. By contrast, net recipient economies should reduce their structural vulnerabilities through economic diversification, enhanced institutional transparency, and flexible macroprudential measures, while strengthening strategic energy reserves to improve resilience against external shocks and cross-border contagion.

Abstract Multiple exchange rate systems have been adopted in many emerging markets to regulate the prices of essential goods and mitigate consumption inequality. In Iran, in the spring of 2022, the Tarjihi exchange rate for most essential goods was abolished, and cash transfers to households increased. These policy changes provide an opportunity to examine the effects of multiple exchange rate policies on consumption inequality. The present study examined the impact of multiple exchange rate policies on consumption inequality in Tehran, using daily sales data from one of the city’s major retail chains, Consumer Price Index (CPI) data, and household income data from the Refah Database. The analysis covered 16 of Tehran’s 22 districts, representing different income levels. It also employed a triple-difference-in-differences (DDD) approach to estimate the policy’s effects. The results showed that overall consumption inequality across Tehran’s districts did not change significantly. However, inequality in consumption of certain product categories, particularly meat and dairy products, increased in the medium term. This study is the first to examine the impact of the policy package that eliminated the Tarjihi exchange rate and increased cash transfers on consumption inequality. The findings provide valuable evidence for policymakers seeking to evaluate the effectiveness of multiple exchange rate policies and their implications for household consumption.
Introduction
In 2018, Iran introduced a subsidized exchange rate—known as the Tarjihi rate—of 4,200 tomans per US dollar for essential imports, substantially below the prevailing market rate. In May 2022, the government abolished this Tarjihi rate for most essential goods and increased monthly cash transfers for most households from approximately 95,000 to 300,000–400,000 tomans per person.
The distributional effects of this policy package are theoretically ambiguous. Eliminating the subsidized exchange rate raises the relative prices of affected goods, potentially placing a disproportionate burden on lower-income households, which typically allocate a larger share of their expenditure to essential goods and have fewer opportunities to substitute toward alternatives. However, the simultaneous increase in cash transfers may partially offset these losses.
The present study aimed to analyze the effects of multiple exchange rate policies on consumption inequality in Iran. It sought to address the following research questions: (1) Did the removal of the Tarjihi exchange rate, combined with the increase in cash transfers, affect consumption inequality across Tehran’s districts with different income levels? And (2) did these effects vary across product categories and over time, specifically between the short term (1–2 weeks) and the medium term (3–6 weeks)?
Materials and Methods
This study drew on three main data sources. The first comprised daily sales data for the Iranian calendar years 1400 (2021–2022) and 1401 (2022–2023) from the largest branch of a major retail chain in each of 16 of Tehran’s 22 districts. The retailer accounted for approximately 10% of retail purchases in Tehran and charged uniform prices across all its branches. The data covered seven product categories: groceries; meat; fruit and vegetables; dairy products and eggs; clothing; detergents, cosmetics, and personal hygiene products; and home appliances.
The second source was a 2% sample of the Iranian Refah Database, which provides individuals’ postal codes, economic deciles, and annual Shaparak card payments. The analysis used the median Shaparak payments per person in each district in year 1400 as a measure of district-level income. The third source was the Central Bank of Iran’s monthly Consumer Price Index (CPI) for 14 product categories over the period 1395–1401 (2016–2023).
The empirical analysis consisted of two stages. First, monthly inflation was forecast using an ARMA(1,1)–SARMA(1,1) model estimated over the pre-policy period. Product groups whose realized inflation in June 2022, immediately following the policy intervention, had fallen outside the 95% forecast interval were classified as experiencing an unexpected price increase. Second, a triple-difference-in-differences (DDD) framework was used to measure the effect of the policy package on consumption inequality. The analysis compared spring 1401 (2022) with the remainder of 1400 (2021) and 1401 (2022), exploiting variation across districts with different income levels and across months (or weeks) within the season.
The coefficient of interest measured the extent to which sales increased more, relative to the control period, in a district with 1% higher income. A positive value indicated an increase in consumption inequality. The main outcome variable was the logarithm of branch-level sales, and all specifications included branch and time fixed effects. The models were estimated separately for total sales and for each product category at monthly and weekly frequencies.
Results and Discussion
According to the results, the removal of the Tarjihi exchange rate was associated with heterogeneous price increases across product categories. Meat, dairy products and eggs, and groceries experienced unexpected inflation around the time of the policy intervention, whereas fruit and vegetables and the non-food categories did not exhibit comparable unexpected price increases.
Despite this price shock, the monthly analysis revealed no statistically significant change in overall consumption inequality. This finding also held when product groups were examined separately according to whether they had experienced an unexpected price increase. Thus, at the aggregate level, the policy package was not associated with a statistically detectable widening of consumption expenditure disparities across districts.
The disaggregated analysis, however, revealed substantial heterogeneity across product categories. The weekly estimates indicated a medium-term increase in consumption inequality for meat and dairy products and eggs following the policy intervention. In contrast, groceries exhibited no significant medium-term increase in inequality despite experiencing a price shock, possibly because they are essential goods with relatively price-inelastic demand. Fruit and vegetables, which did not experience a comparable unexpected price increase, likewise showed no policy-related increase in inequality; the upward trend in the monthly estimates predated the intervention. Clothing and home appliances also exhibited no significant medium-term effects, while detergents, cosmetics, and personal hygiene products showed only a modest increase in inequality.
The dynamic estimates further indicated that some product categories experienced a temporary decline in consumption inequality during the first one or two weeks following the intervention—particularly meat; dairy products and eggs; and detergents, cosmetics, and personal hygiene products. Given the monthly disbursement of cash transfers, this short-lived decline may reflect precautionary stockpiling of storable goods, particularly among lower-income districts. The absence of a similar pattern for fruit and vegetables, which are less amenable to storage, is consistent with this interpretation.

Table 1. Summary of Medium-Term Inequality Results





Product categories


Price increase


Medium-term inequality (3–6 weeks)




Groceries


✔


---




Meat


✔


↑




Fruit and vegetables


✖


---




Dairy products and eggs


✔


↑




Clothing


✖


---




Detergents/cosmetics/hygiene products^*


✖


---




Home appliances


✖


---





Note. ✔: realized inflation in Khordad 1401 above the 95% forecast interval; ↑: significant increase in inequality; ---: no policy-related increase. ^*Small increase in the weekly specification.
Conclusion
According to the findings, the policy package did not lead to a statistically significant change in overall consumption inequality. However, meat and dairy products and eggs—product categories that experienced substantial price increases following the reform—exhibited an increase in consumption inequality in the medium term. In contrast, groceries, fruit and vegetables, and most non-food categories showed no statistically significant policy-related increase in inequality.
These findings suggest that the distributional consequences of a multiple exchange rate reform cannot be assessed solely on the basis of aggregate consumption. The results are also consistent with cash transfers having mitigated the overall distributional impact of the reform, even as inequality increased in certain affected product categories.
Because the data was aggregated at the branch level, inequality within districts could not be measured. Future research can address this limitation by using household-level transaction data, such as Shaparak records, to examine within-district consumption inequality more precisely.

Abstract The present study examined the impact of globalization on Iran’s underground economy over the period 1979–2020. To this end, the method of multiple indicators multiple causes (MIMIC) was used to measure the size of the underground economy. Subsequently, the autoregressive distributed lag (ARDL) approach was used to analyze the effects of the three main dimensions of globalization (i.e., economic, social, and political), as well as the de facto and de jure components of each dimension. The long-run estimation results indicated that the economic and social dimensions of globalization had negative effects on the underground economy, whereas the political dimension had a positive effect. Further analysis of the components of each dimension showed that both the de facto and de jure components of social globalization had negative effects on the underground economy. While the de jure component of economic globalization had a negative effect, its de facto component did not have a statistically significant effect. With respect to the political dimension, the de facto component had a significant positive effect on the underground economy, whereas the de jure component had no statistically significant effect. In addition, the results showed that, across all four estimated models, unemployment had a positive effect on the underground economy, while financial deepening had a negative effect. Overall, these findings provide useful insights for policymakers seeking to reduce the size of the underground economy and enhance economic transparency in Iran.
Introduction
The size of Iran’s underground economy has increased over the past several decades, accounting for a substantial share of the country’s economic activity. Studies investigating the determinants of the underground economy have identified macroeconomic factors such as unemployment, inflation, and the tax burden as important drivers of its expansion. In addition, trade restrictions and revenues from natural resources are considered as important determinants of the size of the underground economy in Iran.
Alongside these factors, globalization—through the expansion of cross-border interactions and transformations in economic and social structures—has increasingly been recognized as an important factor influencing national economies. In this respect, examining the relationship between globalization and Iran’s underground economy is particularly important given the country’s specific economic conditions and its integration into broader global economic developments. However, despite the growing literature on the relationship between globalization and the underground economy, relatively little empirical research has examined the effects of globalization on the underground economy in developing countries, particularly Iran, where the underground economy constitutes a substantial component of economic activity.
Globalization encompasses a wide range of processes, including the increasing mobility of capital, goods, and services, as well as the diffusion of ideas, knowledge, and social norms. As a complex and long-standing process, globalization has influenced various dimensions of economic, social, environmental, and political life. Economic globalization, in particular, involves the international movement of goods and services, cross-border capital flows, reductions in tariffs and other trade barriers, migration, and the diffusion of technology and knowledge.
The broad and multifaceted effects of globalization have attracted considerable scholarly attention over the past three decades. Contributing to this strand of the literature, the current research aimed to examine the impact of globalization on the size of Iran’s underground economy during 1979–2020, with particular emphasis on three dimensions of globalization and their two components. It sought to address the following research questions: Do the different dimensions of globalization and their respective components have significant effects on the size of Iran’s underground economy? If so, what is the nature of these effects?
Materials and Methods
To examine the effects of globalization on Iran’s underground economy over the period 1979–2020, the study first used the method of multiple indicators multiple causes (MIMIC) in order to measure the size of the underground economy. Then, the autoregressive distributed lag (ARDL) approach was employed to estimate the coefficients under four different scenarios.
In the first scenario, the analysis examined the effects of the three dimensions of globalization (i.e., economic, political, and social), as well as a set of control variables, on the underground economy. The three remaining scenarios focused on the de facto and de jure components of each dimension of globalization. Specifically, the research model was reformulated separately for the economic, social, and political dimensions, resulting in the second, third, and fourth scenarios, respectively. This framework allowed the study to assess not only the effects of the three broad dimensions of globalization but also the distinct effects of their de facto and de jure components on Iran’s underground economy.
Results and Discussion
The first scenario examined the effects of the three dimensions of globalization (i.e., economic, social, and political) on Iran’s underground economy. The estimation results indicated that the economic and social dimensions of globalization had negative (favorable) effects on the underground economy in both the short and long run. In contrast, the political dimension of globalization exhibited a positive (unfavorable) effect.
In the second, third, and fourth scenarios, the de facto and de jure components of each dimension were examined separately to provide a more nuanced assessment of their respective effects. Regarding social globalization, both the de facto and de jure components had negative and statistically significant long-run effects on the underground economy. With respect to economic globalization, the de jure component was found to have a negative (favorable) effect, whereas the de facto component did not have a statistically significant effect. In the case of political globalization, the de facto component exerted a positive (unfavorable) and statistically significant effect on the underground economy, while the de jure component did not have a statistically significant influence.
The control variables also produced consistent results across the four scenarios. Unemployment was found to have a positive (unfavorable) effect on the underground economy, indicating that higher unemployment is associated with a larger relative size of underground economic activity. In contrast, financial deepening exerted a negative (favorable) effect, which is consistent with theoretical expectations regarding the role of financial development in reducing the participation in informal economic activities.
Furthermore, the positive and statistically significant coefficient of the dummy variable indicated a substantial increase in the relative size of Iran’s underground economy during the 1979–1985 period. Overall, these findings highlighted the heterogeneous effects of globalization on underground economic activity, depending not only on the dimension of globalization considered but also on whether its de facto or de jure component is examined. They therefore provide actionable insights for policymakers seeking to curb informal economic activities.
Conclusion
The results of the present study were consistent with the transformationalist school of thought, which conceptualizes globalization as a complex and multifaceted process. Furthermore, with some modifications, world-systems theory provides a useful framework for explaining the adverse effects of the political dimension of globalization. By emphasizing the hierarchy of global power, world-systems theory demonstrates how political pressures exerted by core countries can negatively affect peripheral economies.
Overall, the findings highlighted the complexity, heterogeneity, and multidimensional nature of globalization’s impact on the underground economy in Iran. On the basis of these findings, policymakers should prioritize policies that strengthen the economic and social dimensions of globalization in order to reduce the relative size of the underground economy. In the economic domain, such policies should aim to increase international reserves, diversify trading partners, establish international investment agreements, and promote foreign direct investment. In the social domain, policies should seek to increase the number of international tourists, foreign migrants, and international students, as well as expand the number of international airports. In the political domain, efforts should focus on optimizing the political aspects of globalization in order to prevent the expansion of the underground economy.
Finally, employment and financial deepening are two important economic factors that can contribute to reducing the size of the underground economy. In other words, the study underscored the need for a multidimensional approach to addressing and reducing the underground economy in Iran.

Abstract Thanks to blockchain technology, the future of banking may evolve without traditional intermediaries. In this context, central bank digital currencies (CBDCs) and stablecoins issued by BigTech companies are emerging as the main competitors in the new monetary era. Against this background, the present study used a dynamic stochastic general equilibrium (DSGE) approach to model the economic effects of issuing Iran’s CBDC (i.e., Digital Rial) over the period from 2009 to 2022 (1388–1400 in the Iranian calendar). In the model, Digital Rial was assumed to be an account-based, widely accessible, and interest-bearing form of money that would complement cash. The model results indicated that the issuance of Digital Rial could diversify the Central Bank’s policy instruments and enhance the effectiveness of monetary policy in response to both supply and demand shocks. Issuing an appropriate amount of Digital Rial, particularly in the context of stagflation in Iran’s economy, could enable the Central Bank to implement disinflationary policies while mitigating their adverse effects on the production. Moreover, the dynamics of deviations in transaction costs constituted the most important factor affecting the monetary transmission mechanisms. Finally, given the growing adoption of electronic payment solutions in Iran and the resulting decline and eventual obsolescence of cash usage, the Central Bank could use Digital Rial to provide liquidity services more effectively while maintaining a direct relationship with the public.
Introduction
The emergence of Bitcoin during the 2008 financial crisis brought about significant changes in the financial and banking sectors and introduced a range of new solutions and concepts. Since the underlying idea behind many of these innovations, including Nakamoto’s original proposal, is to enable transactions without the involvement of a third party, central banks around the world have closely monitored these developments. In fact, the declining role of cash in the payment system may pose a challenge to central banks’ sovereignty. In response to these developments, central banks have sought to improve the effectiveness of their operations through new initiatives. One such initiative is the introduction of central bank digital currency (CBDC) as a new monetary instrument.
Although the introduction of CBDCs could provide central banks with new capabilities, questions and uncertainties regarding their economic consequences have led many countries to adopt a cautious approach rather than introduce them rapidly. In Iran, the issue of CBDCs subsequently entered academic, policymaking, and executive discussions. However, there is a lack of macroeconomic analysis based on formal modeling. In this respect, the present study used a stochastic dynamic general equilibrium (DSGE) model to investigate the effects of issuing a CBDC on Iran’s monetary policy over the period from 2009 to 2022 (1388–1400 in the Iranian calendar).
Materials and Methods
The present study used a DSGE approach to model the effects of Digital Rial on Iran’s monetary policy. In the research model, Digital Rial was treated as a financial asset. Although it is digital, it is denominated in Iran’s legal tender (i.e., the rial). Thus, its issuance would create a liability on the Central Bank’s balance sheet. Digital Rial was also assumed to be an interest-bearing, account-based form of currency.
The model was based on a New Keynesian framework. In order to explain business cycle dynamics in Iran as a developing economy, it incorporated both formal and informal labor markets, labor market rigidities, and transaction costs. The objective was to evaluate the effects of introducing Digital Rial alongside the country’s existing legal tender (i.e., the rial). The analysis also focused on the interaction between Digital Rial and the labor market.
For simplification, the model abstracted from financial intermediaries and assumed that money was entirely created by the government. Household money demand arises from transaction costs, with cash and Digital Rial serving to reduce these costs. Model calibration aimed to minimize the distance between theoretical and observed empirical moments. The remaining parameters were calibrated using a perturbation method based on a second-order Taylor expansion and implemented in Dynare software.
The Iranian economy was analyzed over the period from 2009 to 2022 (1388–1400 in the Iranian calendar). The quarterly data included real consumption, gross domestic product (GDP), consumer inflation, gross fixed capital formation, total government expenditure, and the unemployment rate. The contribution of the informal sector was captured through the labor force participation rate.
Results and Discussion
Applying a demand-side shock showed that an increase in government expenditure led to an increase in output, although it also generated a substitution effect on investment and consumption. A positive demand-side shock was inflationary, as it would increase government expenditure and, consequently, aggregated demand. As a result, the monetary authority was expected to adopt a policy aimed at reducing inflation.
The analysis also yielded insights on the role of monetary balances (both cash and Digital Rial) in the liquidity production function. In the absence of Digital Rial, an increase in the interest rate would raise the opportunity cost of holding cash, thereby reducing the demand for cash. Under the quantitative rule, however, an increase in the supply of Digital Rial would reduce the demand for cash because of the interest earned on Digital Rial. In contrast, under the price rule, adopting the same policy would increase the demand for cash because an increase in the nominal interest rate, together with a decrease in the interest rate paid on Digital Rial, could make cash relatively more attractive. Furthermore, an increase in the interest rate would reduce the demand for Digital Rial balances under both rules, although the decline was greater under the price rule. This effect reflects a response to the deviations generated by transaction costs.
The impulse-response functions indicated that a positive technology shock would increase the demand for inputs by reducing marginal costs. Consequently, the increase in input demand is accompanied by a decline in the unemployment rate. As household income rises, both consumption and investment increase, and the combined effect of these changes would lead to higher demand for monetary balances—including both cash and Digital Rial—in order to reduce transaction costs. The increase in household income and consumption would also lead to higher wages in both the formal and informal sectors. As a result, the labor market could become more attractive, leading to an increase in the labor force participation rate.
Conclusion
The growing adoption of cryptocurrencies among the general public, together with the sharp decline in the use of cash as the primary direct channel of interaction between central banks and the public in everyday transactions, has raised serious concerns about the ability of central banks to influence economic activity through conventional monetary policy. In response, many governments and central banks are seeking to preserve or restore their central role in an increasingly rapidly evolving monetary landscape.
To achieve these objectives, central banks have adopted a broadly similar approach, that is, exploring the potential issuance of CBDCs. On the one hand, considerable uncertainty remains regarding the optimal technical and economic design of such currencies. On the other hand, there is substantial uncertainty about the potential effects of their introduction on the broader economy and the monetary and financial system. These uncertainties have led many countries to adopt a cautious, experimental approach, closely examining the outcomes of similar projects in other countries and drawing on their experiences and strategies. In Iran, the potential issuance of a CBDC is also significant for an additional reason: it may create new opportunities for circumventing the international sanctions through cryptocurrencies.
Having examined the various dimensions of CBDC issuance, the present study developed a DSGE model incorporating Digital Rial. Using quarterly data and calibration parameters relevant to the Iranian economy, the analysis evaluated the effects of issuing Digital Rial as a new instrument of monetary policy. The introduction of supply-side and demand-side shocks made clear that the issuance of Digital Rial has the potential to improve the efficiency and effectiveness of monetary policy.
According to the developed model, the deviations in transaction costs constitute the main mechanism through which the Rial affects the economy, and this new tool can strengthen the possibility of reducing deviations in transaction costs. The results of the model also showed that the higher the reward for holding Digital Rial, the lower the sacrifice ratio (the amount of production that is lost for one unit of inflation reduction)—which is a desirable outcome. Furthermore, the ratio of Digital Rial to GDP should not be excessive. Beyond a certain level, not only does Digital Rial cease to reduce the deviations caused by transaction costs, but it may also exacerbate these deviations and worsen the sacrifice ratio.
Concerning Digital Rial, the Central Bank of Iran should consider the fact that the amount of the bonus awarded for holding Digital Rial and the degree of liquidity would affect the efficiency of Digital Rial. Overall, the issuance of Digital Rial can enhance the effectiveness of the Central Bank’s monetary policy and can be particularly effective in implementing policies aimed at addressing stagflation.

Abstract This study examined the global structure of foreign direct investment (FDI) networks using data from 193 countries for 2016 and 2021. The study analyzes the overall structure of FDI networks, countries’ centrality, and their positions within the international investment system. Furthermore, principal component analysis (PCA) was employed to construct a composite index for evaluating countries’ positions within the network. Based on this index, the analysis identified the most suitable potential investment partners and alternative partners, with particular emphasis on Iran. The results indicated a core–periphery structure in the global FDI network. The United States, the Netherlands, Luxembourg, Germany, the United Kingdom, France, Japan, Switzerland, Ireland, and Canada occupy central positions within the network and achieve high composite index scores, identifying them as the world’s leading investors. However, in the case of Iran, the constraints imposed by international sanctions and existing political relations necessitated a more context-specific approach. Accordingly, three scenarios were developed based on the severity of sanctions, with the aim of enabling Iran to leverage regional and global capacities to attract foreign investment and promote economic development.
Introduction
The formation and accumulation of capital are among the fundamental prerequisites for economic development. In general, investment is one of the most important factors contributing to the expansion of national production. A lack of capital, together with the need for new technologies and technical knowledge, has led developing countries to seek ways to attract foreign investment. In this context, foreign direct investment (FDI) is one of the most important sources of international finance. In addition to supplementing domestic capital, FDI can contribute to the transfer of technology and managerial expertise, as well as the development of human capital.
In recent decades, economic globalization and trade liberalization have intensified competition among developing countries to attract FDI. In this context, Iran enjoys considerable potential, including its strategic geographic location, abundant natural resources, and young and educated labor force. However, the country’s position within the global FDI network remains relatively weak.
The present study aimed to examine investment flows within the global FDI network in order to identify the countries that play the most significant roles in the expansion of international investment. Focusing on the case of Iran, the analysis sought to evaluate countries’ positions in the network and identify the most suitable investment partners and potential alternatives.
Materials and Methods
To construct an FDI network, this study used outward FDI data from 193 countries for the years 2016 and 2021. Network theory was used to analyze the relationships between countries. The analysis also examined the indicators related to the structure of the network, including the core–periphery structure. Then, principal component analysis (PCA) was employed to construct a composite index based on out-degree centrality, PageRank, and hub centrality, which helped identify the best investors. Finally, the cosine similarity method was applied to identify alternative investors.
Results and Discussion
The results for out-degree centrality indicated that the United States, the Netherlands, Luxembourg, Germany, and the United Kingdom recorded the highest out-degree values in both years. These findings revealed an asymmetric distribution of outbound power within the FDI network, whereby a limited number of countries control a substantial share of cross-border investment flows. This underscores their role as major capital exporters and key actors in the allocation of global financial resources. From an economic standpoint, the concentration of outbound power in these countries reflects their strong institutional superiority, deep financial markets, and the presence of large multinational corporations.
Regarding PageRank centrality, the Netherlands, Italy, China, the United States, and Thailand ranked among the top five countries in both years examined. As a measure of structural influence, PageRank identifies countries that occupy positions along the main pathways of capital circulation and are connected to highly influential nodes. The results indicated that a relatively stable group of countries maintained high rankings in both years, suggesting the persistence of influence patterns within the global investment network.
From an economic perspective, a high PageRank score indicates high-quality connections, meaning that a country is not only active in terms of investment flows but is also connected to countries with strong financial and technological capabilities. Such a position can facilitate greater knowledge spillovers, more stable access to financial resources, and deeper integration into global value chains. Therefore, PageRank centrality can be viewed as an indicator of connection quality within the network, complementing volume-based measures of network position.
With regard to hub centrality, Luxembourg, the United States, the Netherlands, Germany, and the United Kingdom exhibited the highest values. This index measures a country’s ability to connect with highly influential nodes in the network and reflects its role in shaping investment routes. According to the findings, the countries with advanced financial systems and prominent intermediary roles in the circulation of capital tend to record higher values for this indicator.
The results indicated a core–periphery structure in the FDI network. A network is characterized as core–periphery when a relatively small number of highly influential nodes account for a large share of transactions, while most other members have limited mutual connections and remain only sparsely linked to one another. This structure implies that the majority of network members rely primarily on the resources, financial capabilities, and attractiveness of a small number of core countries. The core of the network comprised 28 countries, most of which ranked highly in terms of out-degree centrality, PageRank, and eigenvector centrality. This finding demonstrated that the power structure of the global investment network is shaped by persistent institutional and structural factors. Furthermore, on the basis of a composite index, the top 20 investor countries and alternative countries were identified. With regard to Iran, three scenarios were considered based on the continuation, easing, or intensification of sanctions.
Conclusion
FDI is one of the key sources of financing for economic growth. It generates a wide range of spillover effects across various dimensions, including technological advancement, the adoption of modern management practices, and productive capital formation. Moreover, the FDI network exhibits a core–periphery structure. To enhance their FDI performance, countries should strengthen their relationships with the world’s leading investors, including the United States, the Netherlands, Luxembourg, Germany, the United Kingdom, France, Japan, Switzerland, Ireland, and Canada. These countries exhibit both high investment volumes and high-quality investment linkages, maintaining strong connections with other countries that themselves occupy favorable positions within the network. Furthermore, given the sanctions imposed on Iran, there are three alternative investment scenarios reflecting different assumptions regarding the continuation, easing, or intensification of sanctions.

Abstract This study investigated the effects of institutional Islamization on the tendency to forgive in Iran. Using quarterly data from 2012 to 2023. it employed the nonlinear autoregressive distributed lag (NARDL) model to decompose institutional Islamization into positive and negative shocks to examine short- and long-run asymmetries. The findings revealed a significant asymmetric relationship. In the short run, an increase in Islamization had a positive effect on forgiveness (0.217), whereas a decrease exerted a stronger negative effect (−0.155). The long-run results confirmed that positive changes would have a substantial positive effect (0.462), compared with the negative effect of adverse shocks (–0.389). The Wald test rejected the hypothesis of symmetry in both periods. These findings suggest that reinforcing Islamic values within public institutions can promote social morality and forgiveness, whereas a decline in institutional religious values may generate more pronounced social disillusionment. Accordingly, policymakers should strengthen the religious legitimacy and ethical credibility of public institutions while closely monitoring potential declines in values in order to help sustain social capital and public trust.
Introduction
Forgiveness, as a moral foundation of human behavior, has assumed an increasingly important position in contemporary social and psychological thought. It is considered an important factor in maintaining interpersonal relationships, reducing conflict, and fostering social capital, particularly within cultural and religious contexts—as illustrated in “No Type of Forgiveness Is an Island: Divine Forgiveness, Self-Forgiveness and Interpersonal Forgiveness” (Fincham & May, 2021). As discussed by Ayoub (1997) in “Repentance and the Islamic Tradition,” the broader conception of forgiveness is closely associated with repentance, piety, and a return to divine values, and is regarded as a transcendent moral act.
Beyond the individual level, Islam has established various institutional mechanisms for promoting forgiveness through religious sermons, educational programs, devotional practices, and media content. In many Muslim societies, Islam is not merely a matter of personal belief or practice but is also embedded in official institutions and legal frameworks that actively shape citizens’ attitudes and behavior. Against this background, the relationship between institutional Islamization and the tendency to forgive in Iran is particularly significant, given the country’s distinctive institutional and economic context, characterized by international economic sanctions, fluctuations in inflation, and the COVID–19 pandemic. In this respect, the present study aimed to examine the effects of institutional Islamization on the tendency to forgive in Iran.
Materials and Methods
This study employed a quantitative research design based on the nonlinear autoregressive distributed lag (NARDL) model, using quarterly data for Iran covering the period from 2012 to 2023. The sample comprised 48 observations, selected based on the continuous availability of data for the institutional Islamization index. The dependent variable, the tendency to forgive (PHIL), was measured using the Global Forgiveness Index, which assesses forgiveness toward strangers, monetary forgiveness, and forgiveness of time—with higher values indicating greater altruism. The independent variable, institutional Islamization (IS), was measured using the Islamicity Index. The index measures the extent to which a country’s institutions are compatible with fundamental Islamic teachings across four dimensions: Islamic economy, legal and governance systems, human and political rights, and international relations. Scores range from 0 to 10, with higher scores indicating greater institutional compatibility with Islamic principles.
The control variables included GDP per capita (GDPPC), human capital (EDU) measured by the literacy rate, and social capital (SOC) measured using data from the Global Social Capital Index, the World Values Survey, and the World Bank. The NARDL model decomposed institutional Islamization into positive and negative changes to capture potential asymmetric effects. The estimation procedure comprised Augmented Dickey-Fuller unit root tests, optimal lag-length selection based on the Akaike Information Criterion (AIC) and Bayesian Information Criterion (BIC), the Bounds test for cointegration, NARDL estimation of short- and long-run coefficients, the Wald tests for asymmetry, and CUSUM and CUSUMSQ tests for parameter stability. All analyses were conducted through EViews 13.
Results and Discussion
The NARDL estimation results indicated that, in the short run, an increase in institutional Islamization (IS+) had a positive and statistically significant effect on the tendency to forgive (coefficient = 0.217, t-statistic = 2.31, p = 0.026). In contrast, a decrease in institutional Islamization (IS−) had a negative and statistically significant effect (coefficient = −0.155, t-statistic = −2.18, p = 0.033). In the long run, the positive change in institutional Islamization (IS+) had a coefficient of 0.462 (t-statistic = 2.69, p = 0.011), whereas the negative change (IS−) had a coefficient of −0.389 (t-statistic = −2.72, p = 0.010). The error correction term, ECM(−1), was −0.561 (t-statistic = −5.50, p < 0.000), indicating that approximately 56% of any deviation from the long-run equilibrium was corrected in each period.
The results for the control variables indicated that human capital (EDU) and social capital (SOC) had positive and statistically significant effects on the tendency to forgive in both the short and long run. GDP per capita (GDPPC) also had a positive effect, although its statistical significance was comparatively weaker. The model yielded an R² of 0.821, indicating that approximately 82% of the variation in the tendency to forgive was explained by the explanatory variables included in the model. The Durbin–Watson statistic was 1.91, suggesting that there was no serious evidence of autocorrelation in the residuals.
Conclusion
Using quarterly data covering the period from 2012 to 2023 and the NARDL approach, this study examined the relationship between institutional Islamization and the tendency to forgive in Iran. According to the findings, the tendency to forgive responds asymmetrically to increases and decreases in institutional Islamization, suggesting that positive and negative changes in the index have distinct effects on social behavior.
In the short run, an increase in institutional Islamization was associated with a higher tendency to forgive, whereas a decrease in institutional Islamization had a negative effect. This finding suggests that society responds more positively to improvements in Islamic institutional principles, such as economic justice, ethical market practices, and human rights. Conversely, a deterioration in these institutional dimensions is associated with a notable decline in the tendency to forgive. These findings are consistent with institutionalist and social ethics theories, which emphasize that formal institutional frameworks grounded in religious values can shape and influence citizens’ social behavior.
In the long run, similar effects were observed, with the scope and depth of these effects becoming more pronounced. As suggested by the results, sustained improvements in institutional Islamization across governance, economic, and legal structures can contribute to greater trust, stronger social cohesion, and a higher tendency to forgive. In contrast, a weakening of the institutional dimensions captured by the index— particularly those related to social justice, human rights, and governance transparency—may erode moral capital and reduce forgiving behavior over the long term.

Abstract The present study quantitatively examined the conditional association between inflation and individual religiosity within the framework of Islamic economics, testing the hypothesis that economic instability erodes spiritual capital. Using survey data collected from 300 households in 2025 (1404 in the Iranian calendar), the study operationalized religiosity through a standardized instrument based on Glock and Stark’s five-dimensional model. A probit model was estimated, while controlling for socioeconomic factors. The findings revealed a statistically significant negative association between inflation and religiosity: a one-percentage-point increase in inflation was associated with a 28.2% decrease in the predicted probability of religiosity, based on the marginal effect evaluated at the means. However, limited variation in inflation constrained causal identification. By contrast, education and income exhibited positive and statistically significant associations with religiosity. These findings can provide empirical support for the central premise of Islamic economics that macroeconomic instability may erode a community’s intangible spiritual assets, implying that inflation control could be framed not only as an economic objective but also as a cultural and religious priority in public policy.
Introduction
Inflation, as a major macroeconomic phenomenon, has far-reaching implications for various aspects of individual and social life. Although its economic consequences have been extensively studied, its non-economic effects—particularly on religious beliefs, attitudes, and practices—remain relatively underexplored. This study sought to address this gap by examining the relationship between inflation and individual religiosity in Iran.
Within the framework of Islamic economics, inflation is viewed not merely as a fluctuation in the general price level but also as a phenomenon potentially associated with practices that contravene Islamic principles, including hoarding, extravagance, usury, and disruptions in the balance between supply and demand. From an Islamic perspective, inflation may undermine social justice, exacerbate socioeconomic inequalities, and weaken social capital, including trust and solidarity. Religiosity, in turn, is a multidimensional phenomenon that extends beyond individual beliefs and may also be shaped by objective socioeconomic circumstances and the broader environment.
Despite extensive scholarship on Islamic economics and the economics of religion, three important gaps remain. First, the theoretical understanding of how inflation may influence psychosocial outcomes, particularly religiosity, remains underdeveloped. Second, empirical research has focused primarily on income and broader economic shocks, with comparatively limited attention to inflation as a distinct explanatory factor. Third, empirical evidence on this relationship in the Iranian context remains scarce. To address these gaps, the present study aimed to examine the impact of inflation on individual religiosity within the framework of Islamic economics in Iran. Measuring religiosity along five dimensions, the study focused on its relationship with inflation, as the key independent variable, by drawing on micro-level survey data from Iran. The research questions are as follows: (1) Is inflation, as a macroeconomic indicator of economic instability, significantly and negatively associated with individual religiosity in Iran? And (2) through what mechanisms might inflation influence individual religiosity within the framework of Islamic economics?
Materials and Methods
This study adopted an explanatory research design to examine the direction and magnitude of the relationship between inflation and religiosity. The data was collected through a survey of 300 households in Tehran and Kashan in 2025 (1404 in the Iranian calendar). The initial sample size was 384, as calculated using Cochran’s formula. However, due to practical limitations, 300 completed questionnaires were ultimately included in the analysis. Moreover, convenience sampling was used to recruit participants.
The dependent variable (i.e., religiosity) was measured using a standardized instrument based on Glock and Stark’s five-dimensional model of religiosity. The instrument proved to be reliable, with a Cronbach’s alpha coefficient of 0.87. The independent variable was the annual inflation rate in the province where each respondent resided, obtained from the Central Bank of Iran. The analysis controlled for income, education, occupation, age, and city of residence.
A probit model was employed for estimation, and marginal effects were calculated to facilitate the interpretation of the results. The study acknowledged that the cross-sectional nature of the data would limit causal identification. Accordingly, the findings were interpreted as conditional associations rather than definitive causal effects, with their interpretation informed by the relevant theoretical framework. The adequacy of the sample size was further assessed using the events-per-variable (EPV) criterion. With 150 events and six predictors, the EPV was 25, exceeding the commonly recommended minimum of 10.
Results and Discussion
The probit model results revealed a negative and statistically significant association between inflation and the probability of being religious (coefficient = −74.603, SE = 7.296, p < 0.001). The marginal effects indicated that a one-percentage-point increase in inflation was associated with a 28.2% decrease in the predicted probability of being religious, evaluated at the mean values of the covariates. Education (marginal effect = 0.1096, p < 0.001) and income (marginal effect = 0.0078, p = 0.058) had positive associations with religiosity, while occupation, age, and city of residence were not statistically significant.
The model demonstrated a good fit (McFadden R² = 0.409, LR statistic = 163.111, p < 0.001). Moreover, robustness checks using alternative specifications—including a logit model, a logarithmic inflation, outlier exclusion, and interaction terms—confirmed the stability of the main finding. The results were consistent with the literature on the economics of religion, particularly rational choice theory and the concept of religious capital.
Conclusion
The study concludes that inflation may undermine individual religiosity through both opportunity-cost and meaning-making mechanisms. The policy implications include recognizing the potential cultural and religious consequences of inflation when designing economic policies, developing targeted support packages, promoting moderation, and considering the broader non-economic consequences of economic policies. However, the study had limitations due its cross-sectional design, potential endogeneity, convenience sampling, and reliance on official inflation rates rather than perceived inflation. Future research should employ panel data and measures of perceived inflation to better examine the relationship between inflation and religiosity.