Does the Iranian oil supply matter for the oil prices?

There is an increasing tension between the Iranian Government and the west on an increasingly likely European oil embargo and the Iranian threat to close the Strait of Hormuz. The main question is: What will happen to the international oil prices in the case of shocks in the flow of Iranian oil to the international markets? In this study, we analyze the dynamic relationship between the Iranian oil supply and international oil prices from January 1973 - September 2011, using a modified version of the Granger causality test introduced by Toda and Yamamoto (1995). Our results show that there is no Granger causality between the Iranian oil production and international oil prices. Historical data on the Iranian oil production do not provide any useful information to explain the current and future values of international oil prices. Thus, global oil prices do not follow shocks in the Iranian oil production.Oil price, Oil production, VAR model, Granger causality, Sanction, Iran

Illegal Trade in the Iranian Economy: Evidence from a Structural Model

This study investigates the main causes and consequences of import and export smuggling and estimates the relative index of smuggling in Iran from 1970 to 2002. The Multiple Indicators - Multiple Causes (MIMIC) econometric modelling is used for a comprehensive analysis of the latent variable of smuggling. The main results of this paper indicate that the rate of fine for smuggling and the general level of education reduce smuggling, while the tariff burden increases the incentives for illegal trade. More trade openness accompanies more illegal trade for the case of Iran. On average, the relative size of smuggling is about 13% of the total trade in Iran. The absolute amount of smuggling per year is about $3 billion.smuggling, structural equation model, Iran, illegal trade

Macroeconomic of populism in Iran

This paper uses the Dornbusch and Edwards (1990) analytical framework to investigate the macroeconomic populism in Iran under the Ahmadinejad government. My thesis endeavours to place the government of Ahmadinejad in a populist context and forecasts its fall mainly due to macroeconomic instabilities. The purpose of this study is to illustrate how closely Ahmadinejad’s government follows the model of Dornbusch and Edwards (1990).Iran; Populism; Ahmadinejad; Economic Growth

Does the Iranian oil supply matter for the oil prices?

There is an increasing tension between the Iranian Government and the west on an increasingly likely European oil embargo and the Iranian threat to close the Strait of Hormuz. The main question is: What will happen to the international oil prices in the case of shocks in the flow of Iranian oil to the international markets? In this study, we analyze the dynamic relationship between the Iranian oil supply and international oil prices from January 1973 -September 2011, using a modified version of the Granger causality test introduced by Toda and Yamamoto (1995). Our results show that there is no Granger causality between the Iranian oil production and international oil prices. Historical data on the Iranian oil production do not provide any useful information to explain the current and future values of international oil prices. Thus, global oil prices do not follow shocks in the Iranian oil production

Resource wealth and entrepreneurship: A blessing or a curse?

Resource-rich countries of the Middle East and North Africa (MENA) have the highest youth unemployment rate in the world. While other parts of the world are experiencing an increasing trend in new firms' formation as a potential solution for their unemployment problem, the MENA region has the lowest records in new business establishments. In this study, we investigate the reasons behind such a significant lag of the resource-rich countries in entrepreneurship. Panel data for more than 80 countries from 2004-2009 shows that higher dependence on resource rents reduces entrepreneurship activities. The decline is more significant in countries with higher levels of point resources such as oil and coal

Oil Dependency and Quality of Education: New empirical Evidence

The resource curse hypothesis suggests that resource-rich countries (especially oil dependent economies) show lower economic growth rates compared to resource-poor countries. We add to this literature by providing empirical evidence on a new transmission channel of the resource curse, namely, the negative long-run effect of oil rents on the quality of education. Our empirical analysis for more than 70 countries in the period of 1995-2015 shows a significantly positive effect of oil rents on the quantity of education measured by government spending on primary and secondary education. However, we find a robust and negative long-run effect of oil rents dependency on the objective and subjective indicators of quality of education, controlling for a set of other drivers of education quality and regional dummies. The significant negative effect of oil rents dependency on education quality can be explained by both the demand (e.g., skill acquisition) and supply (e.g., teacher quality) side channels

The response of income inequality to positive oil rents shocks in Iran: Implications for the post-sanction period

We study the short and long run responses of income inequality to the positive oil and gas rents per capita shocks in Iran from 1973 to 2012. Using vector autoregression (VAR)-based impulse response functions, we find a positive and statistically significant response of income inequality to oil rents booms within 4 years after the shock. The Autoregressive-Distributed Lag (ARDL) results show that a 10 percent increase in oil and gas rents per capita leads to 1.1 percent increase in income inequality in the long run. The results are robust after controlling for income-distribution channels in Iran. Our analysis can help policy makers to evaluate and accommodate the possible positive or negative effects of lifting sanctions on inequalities in Iran

Causes and Impacts of Remittances: Household Survey Evidence from Egypt

This research provides a qualitative and empirical investigation of the microeconomic causes and impacts of remittances in Egypt. We use data from a field study, involving interviews of 304 remittance-receiving families across 16 Egyptian governorates during May 2015–May 2016. Our Ordinary Least Square (OLS) and Tobit regressions show that the duration of migration, migrant’s age, household income, and household head’s job are the most important predictors of the level of remittances. The first three variables induce the value of received remittances, while the final variable, household head’s job, acts to the contrary and reduces remittances. In terms of remittances allocation, everyday expenses and real estate investments absorb the vast majority of channeled remittances. Most of the respondents (85%) do not invest remittances, and those who invest remittances mainly reside in Upper and Lower Egypt due to the low living costs in these regions

Can Oil-Rich Countries Encourage Entrepreneurship? ‘Yes’, ‘No’ but not ‘Perhaps’

This study provides the first empirical investigation to test one of transmission channels of resource curse, i.e., marginalized entrepreneurship activities. Our panel data analysis of 65 countries from 2004 to 2011 shows a negative and statistically significant association between oil rents dependency and entrepreneurship indicator. This finding is robust to control of other major drivers of entrepreneurship, unobservable country and time fixed effects and a different measurement of oil rents dependency. Additionally our main results show that government effectiveness among other dimensions of good governance has a statistically significant moderating effect in entrepreneurship-oil rents nexus

Military Spending and Economic Growth: The Case of Iran

Over the last decade, the Iranian government budget on military has been higher than the average of the world. The current increasing international sanctions aim to reduce the military capabilities and capacities of the Iranian government. We analyze the response of the Iranian economy to shocks in its military budget from 1959-2007, using Impulse Response Functions (IRF) and Variance Decomposition Analysis (VDA). The Granger causality results show that there is unidirectional causality from the military spending growth rate to the economic growth rate. The response of income growth to increasing shocks in the military budget is positive and statistically significant