ECONOMIC RESEARCH REVIEW
Year:2011 | Volume:10 | Issue:4 (39)|Papers Count:12

Economic liberalization encompasses all the activities which reduce the government control in all fields such as financial, goods, services, and labor markets.The purpose of the present paper is to study the relationship between government efficiency and economic liberalization indices in Middle East and North Africa (MENA) for the period 1995-2008. To do so, we use economic liberalization index data from the Heritage Foundation and government efficiency index from the Word Bank. Our findings based on the econometrics estimated panel data method show a positive and significant relationship between government efficiency and economic liberalization. We have also showed that there is no significant difference between the performance of the Iranian economy and the average of the MENA countries.

The purpose of this paper is to evaluate the effect of financial liberalization on the volatility of exchange rate pass-through for a group of 43 developing countries which have experienced financial liberalization during the recent decades. Accordingly, the effect is examined through estimating a panel regression model using random effects method, for period of 1996-2005. The empirical results indicate that financial liberalization has had expectedly a significant and negative effect on price changes, particularly on exchange rate pass-through.

In this paper, aggregate import demand function is estimated under a foreign exchange constraint for the period of 1959-2007, using Engle-Granger and Vector Autoregressive Model. The estimations in the short run by OLS method indicate that the import function is highly elastic with respect to relative import price and then to foreign exchange receipts. Also, estimation of model in the long-term using Engle-Granger test shows a unique equilibrium relationship between the demand for import and its major determinants. The results obtained from the impulse response function using VAR method indicate that it takes at least nine years to adjust the impacts of shocks to each dependent variable. The results of variance decomposition show that relative price and foreign exchange receipts have the highest relative importance on explaining of import demand. Negative coefficient estimates of dummy variables also show the reduced effectiveness of this period on the aggregate import.

For the past few decades, Chinese cheap goods have occupied a substantial share of consumption markets in different countries such as Iran.In this regard, one of challenging questions is what are the causes and factors responsible for Chinese goods to be so cheap.A possible answer to this question is that china’s exploitation of its labor comparative advantage in production as well as exports of labor_ intensive goods. In this study, rapid growth of Chinese exports during the last three decades is explained by using Heckscher- Ohlin Theory. To achieve this objective, china’s input-output table, which is compiled in the year 2000 is used to compute the production factor content of exports and imports of Chinese goods. Then, Using Leontief and Leamer tests, it is shown that china has comparative advantage in labor- intensive exporting goods.

Reducing income inequality is one of the important goals of every country's economic decision makers. But proper policy making requires exact and correct information about the severity of this inequality. Since usual income inequality indices have some kind of deficiencies, two new indices namely, S-Gini coefficient and Atkinson-Gini indices are being introduced, their properties reviewed and then estimated based on raw household budget data for 1997-2007. Our findings indicate that household income inequality in rural areas is more severe than urban, while the reverse is true when it comes to the per capita (individual) basis. Furthermore, although the severity of income inequality has been reduced till 2003, but increased afterwards.

Corruption is as a complex and multidimensional phenomena with the various causes and harmful effects, where the domain of which could be spread from individual act to overall abuse at every pillar of political and economic structures.Despite the complexity and difficulty of the subject, in the current years, many studies have been done in order to understand the roots, causes and methods of measuring corruption and to offer policies by international societies.This article by using fuzzy logic, explains how to model the economic relations, describes a new algorithm for the measurement of corruption. The results indicate, by assuming two factors affecting corruption (size of underground economy and real wages), the corruption fuzzy index for Iran had been 0.7 during 1964-1969, but it has the decreasing trend for the period of study. Between 1974-1979 and also after 1994, the index shows the increasing trend. After the Islamic revolution and during the Iran-Iraq War, the fuzzy index remained relatively unchanged. After the war, the overall trend of index shows a tendency to increase.

There have always been some curiosities about the accuracy and reliability of philosophical, logical and intellectual foundations of different economic schools. There is no doubt, what is now taught in most of the economics departments all over the world is the tradition of conventional (mainstream) economics, and usually, upon this knowledge, we direct our economic studies and make our policy implications. Now, the question to be asked is that, is this tradition well constructed? Do its explanations of economic phenomena have enough accuracy and reliability? Could the use of formal methods raise explanationary power of mainstream economics and/or orthodox economics? Or, may it be quite the reverse? In other words, is it likely that the use of mathematics has brought some fundamental pitfalls to orthodoxy? In this paper, we will demonstrate that some particular methodological tendencies in mainstream economics, that is, the mathematical-deductive methodology causes some essential pitfalls and shortcomings in this tradition. This is alone a good reason to direct our attention towards heterodoxy and alternative schools, because their approach is less idealistic and more relevant to the ongoing problems of developing countries.

Markowitz model to determine the weight of each stock in the portfolio is based on the optimal choice of stocks, in order to maximize the expected return.On the other hand, the expected value of each stock is placed in the model. The covariance of variations of the stock values is assumed fixed (exogenous) in the model.In this article by combining Markowitz and Sharpe theories a new model is introduced, which is more efficient compared with Markowitz’s efficient frontier.In other word, by endogenizing the covariances of the rate of return of related stocks in the selected portfolio, the expected return of the propsed model is always larger or equal to expanded model compared with markowitz traditional model.In the suggested model, at any given level of portfolio risk, the proportion of unsystematic risk, according to the sharpe theory, which market doesn’t reward, stands on the lowest possible level.The advantage of proposed model, both theorically and practically is proved through finding the optimal portfolio of stocks for large cement factories in Tehran stock exchange market compared with Markowitz model.

Overconfidence theory is one of the major portions in Behavioral Finance trying to explain some inconsistencies in market functions. Based on this theory, it is assumed that more level of overconfidence results to more trading volume in Tehran Stock Exchanges (TSE).This research designed for testing the above theory. In TSE the level of overconfidence measured by miscalibration, better than average effect and illusion of control.Trading volume is broken into two variables: amount of investment and trading volumes.The main hypothesis of this study is to find the relationship between total trading volume and three measures of overconfidence, which all are accepted in 95 per cent of confidence level.The main hypothesis divided into two particular groups; A and B, which have examined the relationship between measures of overconfidence and two measures of trading volumes (amount of investment and numbers of trading, respectively). Except for two special hypotheses of group A, all hypotheses were accepted. We can conclude that numbers of trading would be a better indicator for overconfidence level. Those rejected hypotheses refer to relationship between the amount of investment and two measures of overconfidence, illusion of control and better than average effect.

This study illustrates positive and significant correlation between EVA/Cap and MVA/Cap in all companies listed in Tehran Stock Exchange regardless of their group of industry during 2000-2007. Results are also valid in each industry studied except for Basic Metals and machinery equipments. Statistical method used for hypothesis testing is linear regression. Furthermore, for testing the effect of market value added on explanatory power of independent variable, selected companies were categorized in two groups based on their MVA/Capin 2007. Results confirm positive relations between variables in both groups. Also, independent variable explanatory power in the group of companies with positive MVA/Cap, is higher than in the group of companies with negative MVA/Cap.

One of the most important issues in capital market is to explain the price volatilities by fundamental models. In two recent decades, some adjustments were explored to improve the explanatory ability of models.For instance, bubble component is introduced to increase the ability to explain the price volatilities.In this paper, bubble prices are introduced with specific definitions and mathematical relations, then, the reasons for emergence of bubble price of securities are analyzed from the behavioral point of view.The bubble is an unobservable variable, which is obtained from state-space form and Kalman Filter on current prices. Then, the effectiveness of herding behavior, fad tendency and psychological conditions on bubble are investigated.The empirical results indicate that bubble price in Tehran Stock Exchange Market is affected by herding behavior, fad tendency and psychological conditions.

There are two shortcomings to the current literature of investigating the neutrality and super-neutrality of money in Iran.First, their methodology lacks incorporation of the current developments in time series analysis. King and Watson (1997) have argued that the results obtained in this framework may be misleading. Second, they tend to use the simple sum aggregates to measure money stock in Iranian economy. The recent breakthroughs in the literature point to the weaknesses of such aggregates and suggest using more appropriate measures of money stock. This paper addresses these shortcomings in current empirical studies in Iran by employing the advanced methodology in testing neutrality and super-neutrality of money and also uses a Divisia Index as an appropriate measure of money stock in Iran.The results are in support of the neutrality of money in Iran in almost all of the various cases which were subject to test according to the employed methodology.