JOURNAL OF SUSTAINABLE GROWTH AND DEVELOPMENT (THE ECONOMIC RESEARCH)
Year:2012 | Volume:12 | Issue:1|Papers Count:7

Fluctuations in fiscal policy affect monetary policy and the central bank, because the government's general budget is highly dependent on oil prices and its fluctuations. Therefore, this paper designs a New Keynesian model for Iran with nominal rigidities (prices and wages) and analyzes the impact of technology, oil price, government spending and money supply shocks on macroeconomic variables (inflation, output) in economy of Iran. The data in this article are related to the fixed prices in the year 2004 and run annually from 1966 to 2008 on a per capita basis. Having logarithms taken, the variables are de-traded through Hodrick-Prescott filter. The final model equations are linearized around the steady state and using Uhlig (1999) approach, accidental equations are also linearized and are specified as space state pattern in Matlab software. Finally, the calibration of parameters are assessed, variables are simulated and compared with real data. The results show that the recommended model can simulate the impact of shocks on macroeconomic variables. It also shows that inflation rises in response to all shocks except that of technology. As the figures show, it is also revealed that non-oil output increases in response to technology, oil price, government spending and money supply.

Monetary conditions index (MCI) is used as an intermediate target of monetary policy in many developed countries. More recently, monetary authorities in some developing countries have also attempted to use this operational target to determine the stance of monetary policy in their countries. The MCI is usually computed as a weighted sum of changes in interest rate and exchange rate. The use of interest rate in constructing MCI might not be appropriate in developing countries due to the lack of efficient financial markets in these countries. Some authors have emphasized on the role of credit channel in monetary transmission mechanism for developing countries. Using weighted sum of profit rate, exchange rate and banks credit, this paper constructs proper MCI for the Iranian economy. Aggregate demand and price equations are used to estimate the weights. Finally, the forecasting power of these indices using non-nested tests and root mean square errors is compared. The results show that the MCI augmented with banks credit has better predicting power than those without credit channel. Moreover, it is also revealed that real MCI, as an intermediate target, is preferred to nominal ones.

The purpose of this paper is estimating output gap as one of the variables that affect inflation in the Iranian economy. Therefore, using seasonal data from spring 1989 to winter 2006 and through Hodrick-Prescott filtering techniques the potential output and output gap are estimated and then ordinary least squares approach has been used to find out the relationship between inflation and output gap. Variables such as exchange rates, price index of imported goods, and the adjusted output gap as real variables and expected future inflation have been used for estimating the model considering the facts and theories in the Iranian economy. This test has been done through the rational expectation hypothesis of an enterprise and using a new Keynesian Phillips curve. The research findings verify the new Keynesian opinion. Thus, in Iran where the average rate of inflation in the period, is 19.6% and therefore considered among the countries with galloping rate of inflation, Phillips curve has been estimated with a relatively steep slope. In the long run, the steep Phillips curve according to Keynesians implies that in case of demand shock, the production will increase and compared with the new classic models it has less impact on inflation.

The objective of this paper is to investigate the validity of Wagner's law and the Keynesian view with regards to the relationship between the non-oil gross domestic product and the public sector size for the Iranian economy during the period of 1967-2007. Time series analysis techniques have been used which include unit root tests, cointegration tests and Hsiao causality test. The findings indicate that Wagner's Law is confirmed in both the short-run and the long-run, whereas the Keynesian view is approved only in the short-run for Iran.

The purpose of this paper is to examine the relationship between bank loan rate and housing prices in Iran. For this purpose, some VAR models have been applied, using the following variables: real loan rate, money supply (including the high powered money and the liquidity), GDP, housing services index, and the number of licenses for new houses. The results show that a reduction in the loan interest rate will increase the demand for housing sector because of reduction in cost of borrowing from banking system in order to invest in this sector. In other word, the research findings have implied a negative relationship between bank loan interest rates and housing prices. The results have also revealed that financial repression in the form of bank loan rates control policy induces more investment in housing sector and results into resource depletion of banking system.

This paper examines the economic, political and social determinants which influence foreign direct investment inflow among a set of 83 countries, member states of the Organization for Economic Cooperation and Development, and selected countries of Mena region during the period 1996-2007. The panel data method has been applied to investigate the impact of governance indicators, human development index, environmental sustainability index, ICOR, GDP and economic freedom index, on foreign direct investment inflows. The results indicate that GDP as proxy for market size, governance and environmental sustainability in both OECD countries and the global model were respectively the most effective variables in attracting foreign direct investment. While in the MENA region the market size, ICOR and economic freedom index show a significant effect on attracting foreign direct investment respectively.

The importance of productivity has made it to be one of the most serious discussions in industrial organizing. In economic literature, however, there are some arguments on the role of market structure in productivity changes. While some theorists point out that more competition leads to higher productivity, others believe that monopoly environment would be more efficient. This study examines the effect of competition-that is measured by the number of firms- on labor productivity in the Iranian industries. Using the panel data from the firms hiring 10 employees or more, the results suggest that monopoly and private ownership provide a more suitable environment for reaching higher productivity.