Unemployment Conundrum in Iran

This paper examines the major causes of Iran’s unemployment conundrum using a simultaneous-equation model and annual time series data from 1968 to 2000. It is found that the rate of unemployment responds positively to output gap and increasing economic uncertainty and negatively to the higher growth rates of real investment and inflation, supporting the view that there exists a degree of trade-off between inflation and unemployment. However, since persistent and soaring inflation rates eventually lead to the chronic depreciation of the domestic currency and rising economic instability, it will be irrational to exploit this trade-off to fight against unemployment, particularly in the post-1979 revolution. Iran possesses one of the youngest populations in the world with approximately 40 per cent of its population less than 15 years. It is thus argued that if major tax and constitutional reforms are not undertaken, unemployment will continue to rise, depicting a sombre future for the next working age generation.Unemployment, Iran

AN EMPIRICAL ANALYSIS OF THE BLACK MARKET EXCHANGE RATE IN IRAN

The Iranian rial has been depreciated on average about 12 per cent per annum during the last four decades. This paper examines the long- and short-run determinants of the black market exchange rate employing the cointegration techniques and the annual time series data from 1960 to 2000. Broadly consistent with previous studies, it is found that the black market exchange rate is cointegrated with inflation, real GDP and the import price index. However, in the short run only high inflation and a meagre real growth in GDP are responsible for the depreciation of Iranian currency.

An Empirical Analysis of Australian Labour Productivity

This study presents a model capturing sources of Australian aggregate labour productivity using annual time series data from 1970 to 2001. Labour productivity, or real output per hour worked, in this model is determined by real net capital stock in information technology and telecommunications (ITT), real net capital stock in the non-ITT sector, trade openness, human capital, the wage rate, international competitiveness, and the union membership rate. Given the lack of long and consistent time series data, multivariate cointegration techniques are inappropriate as the cointegration results will be sensitive to the lag length, the inclusion or exclusion of the intercept term or a trend in the cointegration equation and/or the vector autoregression (VAR) specification. Therefore, the Engle-Granger representation theorem and the Hausman weak exogeneity test have been employed to determine the short and long-term drivers of Australian productivity. Empirical estimates indicate that, in the long-term, policies aimed at promoting various types of investment, trade openness, international competitiveness, and the use of wage as an stimulant in a decentralised wage negotiation system, will improve labour productivity. In the short term, all the above variables except for human capital and labour reforms, which both need more time to evolve, determine productivity performance.

What Determines the Demand for Money in the Asian-Pacific Countries? An Empirical Panel Investigation

This paper examines the long- and short-run determinants of the demand for money in six countries in the Asian-Pacific region using panel data (1975-2002). Various country-specific coefficients are allowed to capture inter-country heterogeneities. Consistent with theoretical postulates, it is found that (a) the demand for money in the long-run positively responds to real income and inversely to the interest rate spread, inflation, the real effective exchange rate, and the US real interest rate; (b) the long-run income elasticity is greater than unity; and (c) both the currency substitution and capital mobility hypotheses hold only in the long run.Demand for Money; Money and Interest Rate Spread; Panel Data

Identifying Australia’s High Employment Generating Industries

Using the latest Australian input-output (IO) table, this paper aims to identify the high employment generating industries. First, the direct and indirect contribution of the tradeable industries to employment are quantified by adopting the “loss of the industry” or “Shut-down of industry” approach. Second, the sectoral employment elasticities are calculated to determine the leading employment generating sectors. The empirical analysis and rankings undertaken in this study shed some light on the sectoral potentials in relation to the creation of jobs in the economy. Further, this study provides some inputs for setting the effective rate of assistance for import competing industries.

Macroeconometric Modelling: Approaches and Experiences in Developing Countries

This paper selectively reviews various approaches of macroeconometric modelling and highlights some important lessons from more than half a century of model-building particularly in the context of Asian countries. Addressing several issues discussed in this paper can improve the use of macroeconometric models (MEM) in forecasting and policy analysis in the foreseeable future. This survey shows that most MEMs in developing countries are either becoming smaller in size or not being subject to a thorough diagnostic investigation. In the specification of models one should consider the interplay among macroeconomic policies of different countries via international trade and global financial markets. It is argued that the Project Link and the Fair multi-country model are two initiatives in the right direction. It also appears that with advancement of econometric "know-how", the disparity of opinions between advocates and critics of macroeconometric modelling can be narrowed.Macroeconometric modelling, Asian Developing Countries

Pre- and Post-Dynamic GST Effects on Goods and Services Included in the CPI Basket

This paper quantifies the magnitude and duration of the GST effect on the quarterly growth rate of the eleven groups of the consumer price index (CPI) in Australia using the Box and Tiao intervention analysis. It was found that prices did not increase significantly before or after the introduction of GST beyond what could have been expected on the basis of the discernible systematic pattern of fluctuation in the data. Furthermore, the varying one-off effect of GST on prices was significant in seven out of eleven CPI groups, the effect was found insignificant for the other four CPI groups.Intervention Analysis; Goods and Services Tax; Australia

History Of Macroeconometric Modelling: Lessons From Past Experience

This paper reviews briefly the general literature on macroeconometric modelling and highlights some important lessons from more than half a century of model-building. It appears that from the late 1940s to the 1960s this field has contributed to the expanding knowledge of both economists and econometricians. However, from the early 1970s, several issues invalidated macroeconometric models. These issues are: theoretical contrasts with rational expectations theory, structural instability, the arbitrary division of endo-exogenous variables of the model, the existence of the problem of unit roots (spurious regressions) and insufficient amount of econometric \"know-how\". It is argued that with advancement of econometric \"know-how\", the disparity of opinions between advocates and critics of macroeconometric modelling can be narrowed.

Which Industries Create More Employment? A Cross-Country Analysis

The objective of this paper is to identify high employment industries in Australia, Japan and the U.S using input-output (IO) analysis. It is found that (1) the high and low employment generating industries in 1980 and/or 1990 are almost the same as those in 1997. Thus on a relative basis, there is no evidence that high employment generating industries have changed since 1980; and (2) the high and low employment generating industries are very similar across these three countries. Four of the consistently high employment generating industries in these countries are Food, Beverage and Tobacco; Chemicals, Petroleum, Coal, Rubber & Non-Metallic Minerals; Basic Metals/Fabricated Products; and Electricity, Gas and Water, with the first three industries being part of manufacturing.input-output analysis, Employment, OECD

Modelling Demand for Broad Money in Australia

The existence of a stable demand for money is very important for the conduct of monetary policy. It is argued that previous work on the demand for money in Australia has not been very satisfactory in a number of ways. This paper examines the long- and short-run determinants of the demand for broad money employing the Johansen cointegration technique and a short-run dynamic model. Using quarterly data for the period 1976:3-2002:2, this paper finds, inter alia, that the demand for broad money is cointegrated with real income, the rate of return on 10-year Treasury bonds, the cash rate and the rate of inflation.Demand for Money, Money and Interest Rates, Cointegration, Australia.