IRANIAN JOURNAL OF APPLIED ECONOMICS
Year:2011 | Volume:2 | Issue:4|Papers Count:6

Up to now energy consumption in Iran due to having cheap sources of energy and support from government subsidies in comparison with the international standards has been high. Determining energy prices lower than the world price by the government increases government spending and as a result increases unsustainable budget deficit. Undoubtedly removing energy subsidies for optimal allocation of limited resources is the most important task that should be done in the Iranian economy. The aim of this study is to investigate the effects of removing energy subsidies on macroeconomic variables such as economic growth and energy consumption of petroleum products such as gasoline and gas oil using VAR econometrics model. For achieving this goal, three hypotheses have been investigated. The first hypothesis indicated that “the subsidies are the Granger cause of GNP growth”. The second hypothesis is “removing subsidies decreases the production” and the last hypothesis is “the effect of removing subsidies takes more than two time period”. Statistical database is the Iranian economy between years 1356 to 1387 when the subsidies were paid. Investigated variables in this study are real price of gasoline, real price of gas oil, real annual gasoline consumption, real annual gas oil consumption, GNP and a dummy variable. Results of this study indicate that if the prices of gasoline and gas oil reduce the consumption of these two products, GDP growth will decrease but if the consumption of these two products does not change considerably, it would not affect GDP growth.

In this research, in order to survey and assess the effects of increasing energy carriers on consumers' welfare costs in Iran, measurement indexes of welfare costs(EV,CV) and AIDS demand function has been used. Applied data including energy carriers' price (Gasoline, Kerosene, Gas Oil, Furnace Fuel Oil, and Liquefied Gas), consumption share and quantity are for the period from 1974 to 2008. Model results indicate that increasing in prices or realizing prices in according to government suggested price scenario results decreasing 16.5% in utility level and  in order to compensating consumers' income and achieving their initial utility level, sum of RLS 510,000 should be paid annually.

The movement in the stock price index is an important indicator in the economic system of a country. The purpose of this paper is to examine the long-run and short-run relations between Tehran Stock Exchange (TSE) price index and monetary and exchange rate variables in Iran. We have used Autoregressive Distributed Lag (ARDL) modeling approach and Error Correction Model (ECM) to determine the effects of monetary and exchange rate variables on TSE price index in the long-run and short-run. This procedure for small sample will be the most appropriate. Quantitative estimates based on the time series monthly data from 2004 to 2009, indicate that liquidity (M2) has a positive effect on TSE price index in the long-run. But, free market exchange rate (FER) and legal reserve (LR) have a negative effect on TSE price index in the long-run. On the other hand, monetary variables have a significant effect on TSE price index in the short-run. However, the coefficient of the Error Correction Term (ECT) shows that the speed of adjustment is slow and the ECM can only explain 69 per cent of the fluctuations of TSE price index.

Subsidies targeting is one the most important and effective step in government action in the direction of economic reform in the country. With implementation of this plan the prices will be actualized leading to the possibility of change in the relative consumer welfare and the composition of consumers’ expenses and their long run demand behavior. Accordingly, the goal of this research is to investigate the above mentioned effects in terms of country demand functions system via Almost Ideal Demand System (AIDS) in form of two groups of import goods and domestic sales in terms of durable and nondurable goods during (1978-2007). For this purpose, after estimating the model, the hypothesis of structural stability of model coefficient will be test in the forecast period of (2010-2015) via simulation of model variables according to the definition of different scenarios of inflation effects resulting from subsidies targeting and the growth rate of gross national product, once on the supposition of government achievement to the goals of the fifth program of development (growth rate of 8%) and the other on the basis of growth rate of 3%.The results showed that the implementation of subsidies targeting policy at the annual gross national product growth rate of 3% and 8% preserves structural stability of demand model coefficients at each inflationary level from 10% to 70%. Accordingly, with emphasis on the continuation of subsidies targeting plan, it is purposed to reduce and control inflation and also to support domestic products.

In this study through the application of econometric methods, the aim is to investigate the motives of emigration in two cases: economic and non-economic motives. Accordingly, first two non-economic indicators are presented for the quality of life with focus on the literature of the subject for all provinces are introduced in the country in the year 1385 and then using the analytical approach to describe the main factors and calculating the disturbance factors, an econometric model is estimated and finally the ranking of provinces on the basis of two indexes of the quality of life is offered. Then using the gravitational model approach, we have investigated who the variables of income ratio of the destination province over the original province, the income inequality ratio in the destination province over the original province, the destination between the two province, the neighborhood of them, the population of the original province and the destination province, the ratio of non-economic quality of life index in the original province over the destination province and the ratio of geographic non-economic quality of life index in the original province over the destination province have affected emigration. This study has been done by using cross-section approach and econometric software-Eviews. The econometric model has been estimated for 870 observations through the weighted least squares method and its results show that income motives have a significant positive effect and non-economic indexes as non-economic motives have a negative effect.

Using annual data of 1967-2007 of Iranian economy, this paper examines the strength of Wagner's Hypothesis. According to Wagner, an overall income growth in an economy leads to relatively larger expansion of the government activities and causes the government expenditure to increase. Using the autoregressive distributive lag (ARDL) of Pesaran et al. (2001) six separate long-term relationships are estimated: (1) government expenditure and output, (2) share of government expenditures in total output and, output, (3) share of government expenditures in total output and, per capita output, (4) per capita government expenditures and, per capita output, (5) government expenditures and, per capita output and finally, (6) government consumption expenditures and, output. According to this study, models (3) & (6) do not confirm any long-term relations between variables while the rest of the estimated models show that a long-term relation is detected. In addition, models (4) and (5) support the Wagner's Hypothesis.