International Economics Studies
Year:2010 | Volume:2 | Issue:35|Papers Count:14

This is undoubtedly recognized that economic performance for each country over time is related to a great extent to its political, institutional and legal environment. In fact, these institutions and policies are that determine the governance quality.In a panel data study, we applied newly developed indices to examine the effects of good governance on FDI for fifteen middle-income countries during the period 1996-2005. Findings reveal the good governance, GDP per capita and telephone mainlines (per 1000 people) have significant and positive effects on foreign direct investment. But there is a statistically significant negative relationship between inflation and foreign direct investment.Finally, good governance burden breakdown into its components: voice and accountability, political instability and violence, government effectiveness, regulatory burden, rule of law, corruption. The results of the model indicate that the good governance burden components have significant and positive effects on foreign direct investment.

In this paper, a version of the Vector Auto Regression (VAR) model has been used to investigate the interacted and dynamic effects between social capital and economic development in Iran during the period 1987-2006. To this purpose, variables of human capital, health and income distribution have been considered as the proxies of economic development. In addition, the volume of risky bank cheques has been indicated for the lack of social capital in the country. The empirical results have shown that the higher levels of social capital the more improved development indicators, while the more improved economic development the more enhanced social relationships based on trust, that is, the higher social capital.

The behavior of exchange rate in various exchange markets is not seemingly predictable, while there are different forecasting methods to do so. One of these methods is to use fractals to identify exchange rate behavior. This paper has made attempts to explore the properties of fractals in Iran’s exchange market in order to it can predict and analyze the trend of exchange rate. Accordingly, three factors of fractals have been introduced and measured. Then these factors have been examined for the Iranian currency (Rial) against the US dollar so that there are the fractal properties in the behavior of the exchange rate in Iran.

Welfare effect of tariff for a small country in the case of traditional tariff (exogenous) compared to free trade would decrease the welfare of the country. This paper has shown that the welfare effect of tariff in case of untraditional tariff (endogenous) can be explained by using the specific factors models (Jones) that fundamentally determined by Cournut- Nash Equilibrium system in contrary to traditional case. A monotonic increase in tariff rate would not decrease welfare of the country and it is not vigorously opposed to free trade.

This paper tries to analyze effects of trade and financial liberalizations on the Iran’s government size during both long-run and short- run. Accordingly, a specification of the auto regression with distributed lag (ARDL) has been used for investigating the long run relationships between variables, and a vector correction model (VECM) has examined dynamically the short-run relationships between the government size and the explanatory variables. The time series data rely on the period 1959-2007.The empirical results have indicated that a rise in foreign direct investment (FDI), as a proxy for financial liberalization, and trade openness lead to a decrease in Iran’s government size, while the long-run effect of an increase in FDI is more pronounced than that of the short-run.

The objective of this study has been to develop a typical specification of the Almost Ideal Demand System (AIDS) for Iran’s composition of imports including capital, intermediate and consumer goods. Accordingly, we first test the hypotheses that import demand is homothetic, homogeneous, symmetric, and depends on domestic prices. Then, we estimate the long-run elasticities of the composition of imported goods and domestic supplies by the SUR method over the period 1978-2004. The estimation results indicate that the import allocation model is affected by the domestic supplies, whereas homogeneity and symmetry are rejected, and a dynamic unrestricted model of the AIDS system is selected properly for the structure of the country’s imports over the mentioned period. All commodity groups are ordinary while consumer imports and domestic supplies are necessary. All price elasticities have the expected signs, and intermediate and capital imported goods have a complementary relationship. But both types of imports have a substitution relationship with the domestically produced and consumed goods.

This study uses "Multiple Indicators-Multiple Causes" (MIMIC) approach to model the causal relations between main variables, which determine the underground economy in Iran. We Basically, it examines the relationship between underground and official GDP in Iran, using annual time-series data for Iran during 1965-2005. Accordingly, it is found that the estimated size of the underground economy varies from 6.24 percent in 1965 to 26.15 percent of the formal economy in 2005, while the related minimum and maximum values were 5.50 and 27.76 percent of the economy in 1967 and 2001, respectively. The underground economy is significantly and positively affected by variables such as unemployment and inflation, but negatively by the degree of economic openness.