A study on the efficiency of government spending, optimal fiscal policy and indigenous economic growth in Iran economy

The optimal combination of the government current and capital expenditures is very important from the aspect of influencing on the optimal economic growth, so that lack of attention to the type of government spending leads to inefficiency of the government fiscal policies and failure to achieve the high-valued objectives of economy. In the present study, we used the production function and considering efficiency of the government current and capital expenditures to evaluate their effects on the optimal economic growth. Then, we proposed appropriate policy recommendations. To this aim, we used the modified Devarajan’s model (1998) and vector error correction model for 1966-2013 time-series data. The results show that current and capital expenditures had respectively positive and negative effects on the optimal economic growth. In other words, in Iranian economy, current expenditures are more efficient than capital expenditures. This is in contradiction to the ideas about high efficiency of capital expenditures. The reason for this is the Iranian economy structure and the nature of government current and capital expenditures. So that capital expenditures despite accounting classification, have a non-development nature. This is because of low contribution of economic issues in capital expenditures and high contribution of economic issues in current expenditures. Moreover, due to non-flexibility of current expenditures over 70%, adopted current credits are allocated practically and only 10-30% of development credits are allocated. Selection of economic sectors for development expenditures is inefficient while, current expenditures leads to economic growth by creating real demand in the market.

The effects of green tax on Iran's economy

Background: This research was conducted with the aim of investigating the effects of green tax on Iran's economy. Methods: This was analytical research using the Nordhaus economic model. The data relating to torques and statistical tests were used to compare actual and model data to determine how well the designed Nordhaus model corresponds to the data on Iran's economy, t and f statistical tests were designed to determine the degree of conformity of the Nordhaus model, and the first and second-order coefficients were used for the variables. Data analysis of the gross domestic product, investment, government spending and oil revenue was used with GAMS software.  Results: The values of the simulated and real characteristics did not differ significantly at the 95% confidence level(P-value=0.05), which shows the high compliance of the Nordhaus model with the real data of these variables. According to the Nordhaus model, green tax affects economic welfare. It reduces economic growth in the short term and increases it in the long term. By reducing production, the level of leisure increases and leads to compensate for the reduction in consumption due to reduced production and increased economic welfare. Conclusion: One percentage of increase in the rate of tax on return of capital leads to a reduction in consumption and a reduction in capital. Increasing the rate of tax on return of capital leads to increased tax revenues and helps governments to compensate for pollution costs and improve the quality of the environment

Evaluation of Business Cycle Synchronization by the Oil Revenues (Markov Switching Bayesian VAR Analysis)

The synchronization of business cycles is one of the new topics that have been raised in recent decades in the field of international business at the same time of increased economic integration between countries. Accordingly, considering the influenced Iranian economy by the flow of business cycles, and given that synchronization is investigated by the existence of common factors, so in this study, the synchronization of business cycles of a country as OPEC member with the important and influential factors of oil, which have a significant effect on both the economy of the country and the world, has been studied. Due to the formation of business cycles and the process of oil revenue, the method used is Markov Bayesian VAR Switching (MSBVAR) analysis. According to the obtained results, the synchronization of business cycles between Iran and Iraq during 1985-2015 indicates the high synchronization and symmetry between the two countries' business cycles. The role of oil revenues is significant in justifying the degree of synchronization of business cycles. Regimen 1 (Stagnation) has been more stable than Regime 2 (Inflation) and Regime 1is more likely to be dominant

Detection of Healthcare Bubbles in Iran: a Left-Tailed Augmented Dickey-Fuller (LTADF) Approach

Healthcare bubbles can cause instability in healthcare system. This study investigates the possibility of single and multiple healthcare bubbles in Iran healthcare market. We applied ADF, SADF and GSADF methods of Left-Tailed Augmented Dickey-Fuller to locate single and multiple healthcare bubble episodes. In particular, this study focuses on the explosive behavior of the pharmaceutical products indicator in the Tehran Stock Exchange (TSE) from November 2008 to August 2017. Our results show that the Iran healthcare market has experienced 8 bubbles over the period of 2008-2017, some of which are single, and others are multiple. The first bubble has occurred in June 2010. Other healthcare bubbles have appeared from 2011 until August 2014. However, the seventh bubble appears two years later in August 2016. The peak in healthcare bubbles can be seen in March to April in 2013.  Healthcare policymakers should monitor the market to recognize the bubbles so that they can mitigate the consequences of the bubble in the market and orient the prices of medical and pharmaceutical commoditie

Examination and Comparison of the Economic Effects of International Risk Spillovers on the Iran’s Money Market by Approach the DCGE Model

Opening doors of the economy and moving toward the globalization process increase business transactions, capital mobility and at the same time economies of scale and technology transfer. Naturally, risk spillovers are occurred along with business transactions and capital mobility. They can be effective on various sectors of economy that the most important sector is the money market. Thus, the main question in this study is that do risk spillovers of the oil market has effect on Iran's money market? Given the structure of Iran's economy, one of the most important channels of transferring international risk to the country's economy is oil price changes. According to the exploration of economic effects of financial crises on oil price as well as the previous process of its changes, the seven percent decrease of oil price has been explored as the major scenario and it is tried to show its effect on macro-economic variables especially the money market. Considering the effect of international risk spillovers on macro-economic variables via structural equations, dynamic computable general equilibrium models (DCGE) are employed. The results revealed that the international risk index influences macro variables that most of them are inflation, investment, welfare and demand for money. Given that the present study was focused on the effect of international risk index on the money market, outputs of model estimation showed that the international risk spillover of oil has had an increasing effect on demand for money at first but it has gradually been led to a totally quiet stability

Survey Purchasing Power Equity i Survey Purchasing Power Equity in Iran: The approach of a Bayesian Threshold Auto regression model

The main objective of the research is to investigate the purchasing power parity in Iran using a nonlinear Bayesian Threshold model. In this framework, the study of the purchasing power parity in Iran is used to assess the purchasing power in Iran using the currency data of the US dollar, British pound and Japanese one hundred yen, which is related to the period of 2001 - 2016. In the Bayesian method (nonlinear Bayesian Threshold model), the values ​​are not constant, and in other words, it is random, so a distance is defined. The results show that the exchange rate of the US dollar, the British pound and the Japanese one hundred yen has two regimes. The dollar's dollar exchange rate in the low-income regime has moved to a high-ranking regime after reaching the Rials (15010, 12330). The British pound has moved to the top-down regime after reaching the Rials (47180, 20370). Japan's 100-yen exchange rate has moved to the top-down regime after reaching the Rials (31310, 16000). In addition, observations show that the reaction of the yen against the Rials is relatively stronger than the other two currencies (especially in the second regime