ECONOMIC STRATEGY
Year:2013 | Volume:2 | Issue:4|Papers Count:7

The aim of this paper is to investigate the effect of trade liberalization on the productivity of the industrial sector in Iran using the translog cost function and SUR method, for the period 1974-2006. So far, no research in Iran has examined the concept of trade liberalization by using the cost function. Therefore this method is very creative; using a microeconomic theoretical basis to study the effects of a macro phenomenon.In this study, the dual theorem is used. In such a way that the effect of trade liberalization has been studied from the two aspects of cost and production. The results of this study show that one percent increase in the volume of trade through trade liberalization, on the one hand, will increase industrial production by %0.47 (primary effect of productivity), and on the other hand, will decrease the cost of production by %0.26 (the dual effect of productivity).Moreover the analysis of industry input demand functions shows that moving towards a freer trade regime causes the firms to adopt such production methods that save energy and raw materials, and tend to increase the use of labor and capital.

This paper seeks to quantify and measure welfare costs resulting from inflation.In other words, by making use of Iran’s economy data and models related to welfare cost of inflation, this study aims at identifying the relation between inflation and welfare in Iran’s economy.Thus, a money demand function has been defined for Iran’s money market on which the welfare cost of inflation between 1990-2008 has been estimated. First, we investigate the long-term relationship between money to GDP with interest rate for opportunity cost of holding money, by using Dickey-Fuller unit root and Johansson co-integration method. Then, we calculate welfare cost of inflation using consumer’s surplus method and on the basis of the reverse money demand function and Lucas’s logarithmic (2000) as well as Cagan’s semi-logarithmic (1956) patterns for various inflation and interest rates.According to the inflation and interest rate averages in the above mentioned period, namely 19.06 and 18.41 respectively, this study calculates the welfare cost on both logarithmic and semi-logarithmic models as 3.54 and 1.42 to GDP respectively. In addition, inflation welfare cost curve for the mentioned time has been almost without slope and the trend has been stable within both models.

This paper aims at investigating the effect of increase in food price (bread, red meat, white meat, dairies and egg) on the welfare of urban households in Iran. To this end, the theory of demand and specifically the AIDS was employed to estimate the demand equation; and Compensating Variation Criterion is used to assess changes in consumer welfare. Estimating the demand system of urban households based on budget data for the period 1996-2010 is performed by using panel data. The results show that reduced welfare due to increased food prices among the low-income deciles is greater than among the middle and top-deciles. Results, based on Engel Law, show budget share of food in low-income households is greater than high-income households and as a result, rises in the food prices directly affect this households expenditure and reduces their welfare more than that of the others

The main purpose of this study is to estimate the Lorenz curves of Iran rural and urban income distributions, using alternative parametric models. Alternative parametric Lorenz curves are fitted to income grouped data of Iranian family expenditure surveys in 1999, 2004 and 2009. Then the best fitting models are chosen based on Theil index for goodness of fit, for every year and area. Results show that, for urban population, Chotikapanich, Ortega and Rasche are the best fitting models in 1999, 2004 and 2009 respectively. With respect to rural population, Rasche model is the best in every studying year. Moreover, the comparison of income distribution among rural and urban populations illustrates that, while the income inequality is improving for both populations over time, rural population has a better situation than urban in 2009, in contrast to its situation in other given years.

Taking into account the importance of inflation within Iranian economy, this study uses seasonal data from 1990 to 2011 to examine the role of monetary policies adopted by the Iranian Central Bank on the growth in money supply, and its subsequent effect on formation of medium and high-inflation regimes. The role of such monetary policies on the stability of inflation regimes in Iranian economy is also studied. Using the Markov Switching Model, and assuming constant and fixed transition probabilities, the inflation rate variable has been extended. Results suggest that in moderate inflation regime of Iranian economy, each percent increase in money supply is equivalent to 0/57 percent inflation.Furthermore, in high inflation rate regime no significant effect of increase in money supply on inflation was observed. The estimation results from the Markov regime Switching Models- when assuming constant transition probabilities- show positive effects of money supply increase on the sustainability of medium and high inflation periods in Iranian economy.

In the modern economy, a country's level of development is directly related to its international trade volume. Thus, export development and finding sources of foreign exchange are of prime importance in policy-making. By employing auto regression, vector error correction, Johannson and genetic algorithm, we examine the impact of factors affecting non-oil exports for the period 1971-2009. Results show that in the long run the GDP and export prices in global markets are the crucial factors affecting non-oil exports. Also, domestic inflation and exchange rates in the long run, have less impact on non-oil exports. In the genetic algorithm, the model of export supply is analyzed in the form of three linear, exponential and second degree equations. In the exponential model -with its high level of accuracy in estimating the non-oil exports- the non-oil GDP and the market exchange rates have a direct relation, and global prices for export goods and domestic ones have inverse correlation with non-oil exports. In the end, we forecast the supply of non-oil exports until 2025.

Achieving development while adhering to ethics is only possible when ethical values are preserved in all economic interactions, allowing for both economic and ethical requirements to be fulfilled. Increasing attention has been paid to ethical markets in line with development. Ethical markets are those which focus on investments and activities related to environmental issues and social responsibilities. One of the main goals of sustainable development is to achieve a reasonable level of well being with a justice-based distribution that can be sustained over future generations. Under such circumstances, the society shall move away from an economic growth based on exhaustive consumption of finite resources towards an improvement in the quality of life based on utilization of renewable resources. The article explores the relationship between ethics and development within the framework of sustainable development. The particular view of sustainable development adopted here, is the “capital approach”. According to this approach, sustainable development is achieved through interaction of four types of capital: human, natural, social and material capital, respectively. For each of these types, relevant ethical indicators -as factors influencing ethically that particular type of capital- are defined, as the followings: 1) Environmental performance for natural capital; 2) Augmented social capital for social capital; 3) Quality of life for human capital; and 4) Good governance, underground economy and money laundry for material capital. These selected indicators point to the central issues discussed in ethical markets under sustainable development. The article discusses the value of these indicators for Iran and some of its competitor countries- as listed in Iranian government's Outlook document. The performance of these countries is accordingly compared with that of Iran.