Iranian Journal of Economic Research

Abstract Evaluation of several decades’ policy experience in Iranian economy indicates  the existance of a gap between its current state and targeted state. The simulated steady state of Economy using a dynamic general equilibrium OLG model shows that there are differences between the steady values and current values of all macroeconomic variables in the model, so that per capita capital stock, per capita income and consumption, employment and interest rate are all different from their current values by 0.618, 0.702, 0.201.042 and 0.03 respectively. The optimum state reaction to a proposed fiscal policy package shows that if economic policy makers cut the tax rate by 10 percent, raise the retirement age by 4 years and public pension by 10 percent and cut the time preference rate by 10 percent, in response the steady state per capita capital stock, income and consumption, employment and interest rate will change by 11.67, 4.14, 9.3, 11.25 and -0.41 percent respectively. These findings emphasise the role of revisions in economic policies in achieving   targeted values in future development plans. According to the findings of this study, it is needed to focus on current state of the economy in planning for the targeted values of macroeconomic variables and their  promotion  to higher levels

Abstract Due to increasing economic globalization and the need for greater global participation of countries, policy-makers and politicians throughout the world have broadly addressed the regional cooperation in the past two decades. Iran is no exception and to that end, it seeks to expand ties with central Asian countries. The economic indicators of these countries represent their relatively suitable   situations in terms of population, GDP, per capita income, and social indices. So they could be suitable markets for absorbing Iran's export and supplying its needs. This paper analyzes Iran's potential and capacity for trade ties with central Asian countries with emphasis on complementary trade as well as greater trade potential. Findings of the study indicates that Iran and central Asian countries do not enjoy trade complementarity in all sectors and they have a very low degree of similarity in import from each other. Estimates suggest that Iran's export potential in trade with these countries is approximately $m 899. So it is recommended that further cooperation should be confined to certain sectors (such as industries, oil, and petrochemicals) in which Iran enjoys the required export potential and capacity.  

Abstract   Owing to importance of monetary and financial aspects of macroeconomic fluctuations, and the role of financial intermediaries, in this paper, we design a new Keynesian Dynamic Stochastic General Equilibrium (DSGE) model with regard to banking, to analyze the effect of oil, productivity and monetary shocks on Iran's economy. The effects of those shocks on different variables of the model appear to be consistent with our theoretical expectations and Iran's economy. In fact, inclusion of the banking sector in the model contributes positively to better explanation of Iran's business cycle features. By applying the model, we find that outstanding claims of banking sector reduce the impact of monetary shocks. Therefore, outstanding claims of banking sector is likely to weaken the efficiency of discretionary monetary policy against macroeconomic fluctuations.  

Abstract In recent years, several studies have examined the relationship between financial development and economic growth. But even considering the same Indicators of financial development, findings of these studies have been different. The existence of non-linear relationships can be one of the reasons for these differences. In this paper using the smooth transition regression method, we examine a nonlinear relationship between financial development and economic growth in Iran. The tests of linearity, transition variable election and transition function determination results confirms the existence of non-linear relationship between financial development and economic growth by considering time trend as a transition variable.  The appropriate transition function is LSTR1 that is a logistic function form with one threshold. As a result a regime change in the relationship between financial development and economic growth occurred in about 1989, ( i.e. at the end of the war ). This regime switching can also be considered as a cause for difference in findings of similar studies in Iran.

Abstract In the recent years, females’ literacy rate has experienced a drastic improvement in Iran; accordingly a remarkable increase in their participation rate is reasonably expected. Education is considered as  one of driving forces of females’ presence in the labor market; however they  are likely to be paid less than men in some occupations or activities. This phenomenon is called gender wage gap in the labor market literature. This wage gap occurs when a worker is paid less than her counterpart with the same level of marginal product. This study provides quantitative estimates of the gender gap in the labor market of Iran. To this end, using data on household income and expenditure, from 2005 through 2011, and applying the Oaxaca (1973) and Blinder (1973) wage decomposition, the wage differential between men and women that cannot be explained by human capital characteristics, is estimated as an indicator of gender wage discrimination. The results reveal the existense of the gender wage discrimination in the labor market of Iran, but its magnitude in professional job groups is less than low skilled jobs. Furthermore, the wage differentials in the private sector are much higher than the public sector.

Abstract Subsidies are known to distort prices, the optimal allocation of resources and economic growth and induce budget deficit and increase social costs, resulting in irreparable adverse effects on the economy. On the other hand implemetation of subsidy reform programs can have a widespread impact on economic aggregates  A clearly specified trend  in trajectory of macroeconomic variables is expected to better enable policy makers in planning for appropriate fiscal and monetary policy pakeges. The task of determining the best policy package, consistent with macroeconomic goals and constraints presents a genuine Stochastic Optimal Control problem. Solution for such a problem requires a practical statistical algorithm. The OPTCON2 method employed in this study seems to be a suitable method.  First, the econometric relationships among the macroeconomic variables of the model is estimated using 2SLS statistical method. Subsquently an OPTCON2 prorgram is specified using C # Language in a visual studio.    Simulation program  for subsidies during the 5th development plan indicates a decline in  economic growth for the first year, followed by a small rise in growth rate during the subsequent years.  The findings also indicates an initial rise in inflation  followed with a decline in later periods. It was also indicated that the unemployment rate is likely to rise in the beginning, leveling down to a given rate later.  

Abstract Considering the prohibition of riba (Usury), and consequently the impossibility of using interest based bonds, they can not utilized as policy  tool in the Usury-Free Banking System. As a result the Open Market Operations as specified by buying and selling  interest-based bonds is not applicable in this system. Thereby virtually the oldest and best-known, and yet the most important tool of monetary policy for controling liquidity in the economy is excluded from the set of policy tools of the central bank.. Instead there are certain  replacement securities such as “Participatory Bonds”, “Istisna securities” etc. devised by Moslem economists to be utilized  as a substitute for the Open Market Operations in a non-usury banking system .The current paper using a descriptive methodology attempts to analyz the hypothesis that: “utilization of “Negotiable Certificates of Deposit”, as a compliment for bonds, Sukuk and other securities Provides Central Bank with alternative basis for policy tools in liquidity control and monetary management, within the framework of the Usury-Free Banking System, and therefore to some extent  compensate for the absence of traditional bonds in  monetary policy tools." Finally it is concluded that “Negotiable Certificates of Deposit” as a means of supplementing other securities, can be used in open market operations in a non-usury banking, enabling central bank to buy and sell securities through open market operations in the secondary market, This can effectively enable the monetary authority to manage the liquidity and enforce the monetary policy.  

Abstract The purpose of this paper is to determine the relative importance of economic sectors in Iran on the bases of available input output table for the year 1380(2001).Using Net Forward and Backward Linkages Approach .This approach being superior to other approaches mainly because of avoiding overestimation and double accounting of linkages of sectors that is seen in alternative approaches. The results show that although Gross Multiplier Linkage Coefficients present commodity producing sectors such as agriculture and industry to be relatively more important, probably due to high intermediate material content of these sectors, the Net Multiplier Coefficients, however, show that service sector such as retailers, whole sellers, Hotel, restaurant, education and other service activities are relatively more important in Iranian economy contributing more to growth of other sectors. Taking into account the higher share of services in output and employment in Iran this findings show that the Net Multiplier approach seems to be a more realistic method in determination of importance of sectors in countries such as Iran.