Iranian Journal of Economic Research
Year:2007 | Volume:9 | Issue:30|Papers Count:10

The main purpose of this paper is to examine an appropriate exchange rate policy in Iran . Most of the studies have suggested a flexible exchange rate policy with a coordination between monetary and exchange rate policies for the Iranian economy. In this paper, we test the hypothesis that the managed exchange rate policy is the most appropriate policy for Iran using the Mundell-Fleming model, and 2SLS method for period 1974-2004.The estimated macro econometric model is used to simulate the reaction of five exchange rates regimes to fluctuations of net asset from abroad in the banking system.The results reveal that the managed exchange policy would yield more stable prices, imports, welfare and money stock .In contrast, a quasi-floating exchange rate policy in which the exchange rate is determined by the percentage of trade balance deviations, will result in the worst kind of volatility in prices, imports, welfare and money stock.

Economic growth in addition to the direct income effect on poverty has an indirect distribution effect. The main purpose of this research is to estimate the net economic growth effect on poverty in Iran during the periods 1982-1988, the first socio-economic development plan (1989-1993), the second plan (1995-1999), and a part of the third plan (2000-2001). The results indicate that poverty increased during 1982-1988. Decomposing poverty shows that the reduction in inequality alleviated the level of poverty due to the economic recession. This implies that the reduction in the share of the lower income groups were relatively smaller than that of the higher income groups. Although the poverty increased in this period,, the poor has suffered less relative to the rich. In general, throughout the economic plans era, growth has not been pro-poor, except in the third development plan; the increase in the share of higher income groups has always been relatively more than that of the lower income groups.

Income distribution is usually affected by social and economic structures and especially by factors such as inflation, unemployment rates and the government size. In addition, the level of literacy and education are also seen as important factors affecting the income gap among different groups. The purpose of this article is to study the relationship between educational variables, measured by the literacy level and its dispersion, and income distribution in the Iranian economy for the period 1347-1380 (1968-2001). Our findings indicate that as the average level of education increases, income inequality will decrease; but with increasing the standard deviation of education among citizens, income equality worsens.

In this paper, we study the restricting factors leading to the disequilibrium condition in the Iranian market for bank’s credit using the switching regression model for the period 1353-1383 (1974-2004).The results of our study show that the real banking interest rate, real money supply, real banks reserves in central bank and monetary base have significant relationship with credit supply. Also, the estimation of credit demand shows a positive relationship between the lag of the real deposits and credit demand.The interesting point is the insignificant relationship between the credit demand and the banking interest rate in the study period, but a high significant relationship between supply and the banking interest rate. This implies that the restricting factor in the credit market is the supply side which has always been less than the demand. An estimation of the market clearing banking interest rates in comparison with the real observed interest rates in recent years also confirms the result.

This paper analyzes the industrial activities and their actual comparative advantages in Khuzestan province using two digits ISIC cods and DRC criterion for the period 1377-82 (1998-2003). The results show that international competitiveness of industrial activities has been improved since 1381, the time of implementation of exchange rate unification and relative economic liberalization policies in Iran.This paper also suggests a simple decomposition of DRC measure to isolate the determinant elements of international competitiveness of some industrial activities under consideration. These elements are: (1) government intervention in economy, (2) factor cost, (3) factor proportions and (4) total factor productivity. The results imply that alleviation of the size of government interventions in economy has the most important role in improving the competitiveness of industrial activities in most cases.

Rice is an important item in the Iranian agricultural product imports. This paper presents the estimation of an error correction model of linear approximation of the Almost Ideal Demand System for various kinds of imported rice, including Pakistanian, Thai, and others, as well as Iranian rice. The period of the study covers the period 1981-2004. The findings of the research show that short-run and long-run Marshalian own price elasticities are negative except for that of Pakistanian rice which has a positive elastivity in the short-run, though very close to zero. The short-run Hicksian own price elasticities are all negative and close to those of Marshalian ones, except for Pakistanian rice which is positive in both cases. The Hicksian cross elasticties indicate that all Pakistanian and Thai rice are imported by government in response to the shortages in the domestic market. That is the complementarily of the domestic and the imported rice is not due to the consumer preferences.

Labor force and its quality (human capital) have made large contribution to economic growth and development in many countries. Health is also considered as a way to improve both labor quality and productivity. Present research aims to investigate and analyze the effect of health on labor productivity for the period 1976-2004.The ARDL econometric model used in this study incorporates variables such as life expectancy as a proxy for health, per capita physical capital, and the actual to potential output ratio as the most influential factors on labor productivity.The results indicate that about 38.2% of labor productivity growth is contributed by an increase in health. In addition, our result show that in fourth plan (2005-2009), labor productivity growth will be about 2% less than the figure envisaged in the plan.

In this paper we study one of the most important challenges facing the Iranian Oil authorities: The allocation of natural gas reserves to different uses like exports, petrochemical plants, and injection to oil reserves for enhancing recovery factor. The results show that in the ranking of the project groups on the basis of expected net present value and risk index, the export projects group has a greater value and risk than gas injection projects group and petrochemical group. In choosing the portfolios on the efficient frontier, the amount of gas allocated to export projects should be less if we aim the lower risk than the situation with higher values and risk. However, the amount of gas allocated to injection and petrochemical projects groups will decrease as the risk and value of portfolios increase. Also, the results show that the more risk lover the investor, the higher the amount of gas allocated to gas export projects group.

Facing foreign threats in the region, Iran has been increasing its defense expenditures, for the past three decades. In this paper, we study the impact of the Iranian defense expenditures on the economic growth for the period 1971-2003. We use the Keynesian macro model to show explicitly the relationship between the defense expenditures and the economic growth. Our results indicate that the defense expenditures in Iran have had negative effects on the saving and the balance of trade, and therefore, on the economic growth.