THE OPTIMAL PATH OF INVESTMENT, CONSUMPTION AND GROSS NATIONAL PRODUCTION: AN APPLICATION OF GENERALIZED RAMSEY MODEL IN ECONOMY OF IRAN

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KARIMZADEH MOSTAFA; NASROLLAHI KHADIJEH; SAMADI SAEID; DALLALI ISFAHANI RAHIM

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Paper Information

Journal: JOURNAL OF SUSTAINABLE GROWTH AND DEVELOPMENT (THE ECONOMIC RESEARCH) Year:2013 | Volume:12 | Issue:4 Page(s): 1-25

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Title

THE OPTIMAL PATH OF INVESTMENT, CONSUMPTION AND GROSS NATIONAL PRODUCTION: AN APPLICATION OF GENERALIZED RAMSEY MODEL IN ECONOMY OF IRAN

Author(s)

KARIMZADEH MOSTAFA | NASROLLAHI KHADIJEH | SAMADI SAEID | DALLALI ISFAHANI RAHIM | Issue Writer Certificate

Keywords

TERMS OF TRADEQ3

GENERALIZED RAMSEY MODELQ2

TIME PREFERENCES RATEQ2

CALIBRATIONQ2

SENSITIVITY ANALYSISQ2

ECONOMY OF IRANQ2

Abstract

Ramsey model is one of the most important basic models to study intertemporal resource allocation. This model is derived from microeconomic optimal principle so it has a key role in macroeconomics with micro foundations. Hence, in many economic researches it is considered as a reference theory. Application of this model in ECONOMY OF IRAN will provide an appropriate theorem framework for explaining empirical facts of the Iranian economy and will introduce a new approach to researchers. The main idea of this study is generalizing Ramsey model through including TERMS OF TRADE and its CALIBRATION in the ECONOMY OF IRAN. For this purpose first, the model is explained. Then, the first order condition is derived and mathematical optimal path of variables is solved. Finally, the model is calibrated by GAMS package for ECONOMY OF IRAN in time period (2006-2036). The results indicate that there is a feasible solution for model and the optimal path of variables can be observed. The optimal path of Gross National Production and Consumption are increasing but the optimal path of capital stock and investment is primarily increasing then decreasing. In the final section of this paper a SENSITIVITY ANALYSIS is presented. Some scenarios are designed for the important parameters of model like TIME PREFERENCES RATE, intertemporal substitution elasticity of consumption, labour growth rate and output elasticity of capital. SENSITIVITY ANALYSIS shows that output elasticity of capital and labour growth rate increased the social welfare and shifted optimal path of variables upward. But TIME PREFERENCES RATE and intertemporal substitution elasticity of consumption had inverse effect on social welfare and optimal path of variables.

Cites

COMPARISON OF THE EFFECT OF TAXATION REFORMS ON ECONOMIC GROWTH: A CGE-DCGE ANALYSIS

References

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APA: Copy

KARIMZADEH, MOSTAFA, NASROLLAHI, KHADIJEH, SAMADI, SAEID, & DALLALI ISFAHANI, RAHIM. (2013). THE OPTIMAL PATH OF INVESTMENT, CONSUMPTION AND GROSS NATIONAL PRODUCTION: AN APPLICATION OF GENERALIZED RAMSEY MODEL IN ECONOMY OF IRAN. JOURNAL OF SUSTAINABLE GROWTH AND DEVELOPMENT (THE ECONOMIC RESEARCH), 12(4), 1-25. SID. https://sid.ir/paper/86674/en

Vancouver: Copy

KARIMZADEH MOSTAFA, NASROLLAHI KHADIJEH, SAMADI SAEID, DALLALI ISFAHANI RAHIM. THE OPTIMAL PATH OF INVESTMENT, CONSUMPTION AND GROSS NATIONAL PRODUCTION: AN APPLICATION OF GENERALIZED RAMSEY MODEL IN ECONOMY OF IRAN. JOURNAL OF SUSTAINABLE GROWTH AND DEVELOPMENT (THE ECONOMIC RESEARCH)[Internet]. 2013;12(4):1-25. Available from: https://sid.ir/paper/86674/en

IEEE: Copy

MOSTAFA KARIMZADEH, KHADIJEH NASROLLAHI, SAEID SAMADI, and RAHIM DALLALI ISFAHANI, “THE OPTIMAL PATH OF INVESTMENT, CONSUMPTION AND GROSS NATIONAL PRODUCTION: AN APPLICATION OF GENERALIZED RAMSEY MODEL IN ECONOMY OF IRAN,” JOURNAL OF SUSTAINABLE GROWTH AND DEVELOPMENT (THE ECONOMIC RESEARCH), vol. 12, no. 4, pp. 1–25, 2013, [Online]. Available: https://sid.ir/paper/86674/en

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