---

In urban and regional economics’ literature, according to the concepts of new economic geography model (NEG) and endogenous growth model, spatial agglomeration of economic activities and economic growth are interrelated processes. In the endogenous growth models, how to create new economic activities through innovation is checked. Moreover, the NEG model aims to investigate how to establish these new economic activities, and cause of their concentration. Therefore, innovation, location and growth are interconnected processes within the NEG model. This article examines theoretically and experimentally the effects of economies of industrial agglomeration on economic growth in Iran’s provinces. In theoretical section, a NEG model has been presented. It shows that the agglomeration of industrial activity affects the economic growth. In the experimental section, a model has been estimated by applying Generalized Method of Moments (GMM) using provincial data during 2000-2009. The results indicate the positive and significant impact of industrial agglomeration on economic growth in provincial level in Iran. Also, the amount of industrial agglomeration has been calculated by Maurel-Sedillot index within the 2-digit ISIC codes, which shows that the other transport equipment industry (code -35) has the largest agglomeration, and printing and publishing industry (Code -22) has the smallest agglomeration.

---

Regarding importance of studies on different dimensions of total fertility rate (TFR), this study investigates the socioeconomic determinants of TFR at an aggregate level and identifies their impacts on TFR variations in Iran. By introducing four economic, social, cultural and health components, this paper tests the effects on dependent variable (TFR) using an auto-regressive distributed lags (ARDL) model and error correction mechanism (ECM). Results show that female life expectancy index not only had positive and significant relationship with TFR in several specifications, but also its coefficient was higher than the other coefficients. In addition, the relationships between TFR and other variables, except for GDP per capita, were expectedly significant in dynamic models. The speed of adjustment was very slow, and short-run fluctuations approached long-run equilibrium gradually with long lags. Regarding the effectiveness of different components, it can be said that health component is prior to cultural and social factors, and the economic dimension gets the final rank. Thus, an emphasis on fertility health, especially encourage to marry in marriage ages through social protection schemes could help population dynamism and to enhance the TFR more than substitution rate.  

---

With regard to the increasing income inequality, higher unemployment rates, urbanization, economic inefficiency, lack of economic justice in different societies especially within developing countries, and highlighting the role of governments in achieving a better distribution of incomes, the need for good governance is strongly felt.  This study aims to examine the impact of the good governance on income distribution among the South-Western Asia countries during the period from 1996 to 2013. It estimates two panel data models using Stata12 software. In the first model, the index of good governance quality and in the second model, six indicators of good governance are investigated. The results show that the index of governance quality and the indicators of political stability and government effectiveness have negative and significant effects on reducing inequality. Thus, the proper policy-making may improve the distribution of income in these countries.

---

The ecosystem is a fundamental pillar of human life, which has been changed due to the progress and development of the world. The emission of air pollutants is a key factor in environmental degradation. Air pollutants impose the so-called "degradation costs" on different sectors, which these costs are not included in official calculations. Consumption of energy carriers is the main cause of air pollutants emissions in Iran. Therefore, this research seeks to examine the degradation costs of air pollutants emitted by the use of energy carriers in Iran. One way to reduce the emissions of air pollutants and their degradation costs is to impose tax on the consumption of energy carriers. This study considers a scenario for raising the price of energy carriers to the level of FOB price of Persian Gulf. For this purpose, the standard computable general equilibrium model of Lofgren et al () is used. The statistical basis of the CGE model is the 2006 social accounting matrix (SAM). The statistical data on energy consumption and emissions of air pollutants are derived from the energy balance sheets over the period 2006-2012. In addition, economic sectors are divided into 25 sections according to the ISIC classification. Degradation cost in the baseline scenario is equivalent of 14.43% of GDP (at constant prices) in 2006, which by applying the scenario for increasing the price of energy carriers, this cost declines by 23% and amounts to 10 percent of GDP. Results also reveal that the road transportation and electricity sectors experience the greatest reductions in degradation cost.

---

The implementation of any economic policy that has expansionary effects requires relatively stable economic conditions. Under such conditions it is expected that potential predictable effects of such policy implementation on welfare of households, especially low income households could be evaluated. The economic context of poverty in the Iranian economy and the ineffectiveness of supportive institutions in particular circumstances make the effects of economic policies on low-income households widespread. In some cases, these effects are so broad that policy-makers are forced to leave or select the opposite course of that policy. Under these conditions, analyzes that illustrate the effectiveness path of policy help the policy-maker to have a clearer picture of the probable consequences of a policy. The main aim of this article is to analyze quantitatively the effects of the recent subsidy targeting policy on the welfare index (cost of living index) in different deciles of urban and rural households using social accounting matrix (SAM) approach. For this purpose two updated social accounting matrices for the years 2009 and 2011 have been used. Both matrices include 40 economic sectors. Comparing the cost of living index, we find that welfare vulnerability of households has decreased in general, however the magnitude of welfare reduction differs between rural and urban households among income deciles. Our findings reveal that the cost of living index of rural households is more than the corresponding urban households. The vulnerability in the natural gas distribution sector has tripled in urban areas in 2011and in rural areas it is nearly four times higher than 2009 level. We also find that every 100-unit increase in cost of electricity will potentially increase welfare index of urban and rural household by 34 and 46 units, respectively. From the distribution viewpoint, the welfare loss is lower for high-income deciles. In addition, our findings show that the degree of vulnerability in middle income groups in majority of sectors is less than the other income groups. The structural path of changes shows that subsidy targeting has created wide complexity and entanglement in the path of the effectiveness of fuel price changes on price indices, especially on the household living cost index. Accordingly, before implementing subsidy targeting scheme, the increase in fuel prices was influencing the household cost index in five ways, while after targeting the increase in fuel prices affected it through the twenty different paths. 

---

---

Sustainable development is an essential goal for developing countries, which can be measured by various indices. This paper computes genuine saving for the Iranian economy based on national accounting and examines the relationship between genuine saving and present value of discounted consumption during 1960-2012. The results indicate that genuine saving is mostly negative over the period under study and there is also a negative relationship between genuine saving (as a measure for the nation wealth) and the change in the present value of consumption (as a national welfare index). According to Hartwick’s rule, these findings mean that welfare reduction is a possible outcome in the future.

---

Natural resources generate the major part of national wealth in resource-rich developing countries. Based on economic theories, if natural resource rents are reinvested continuously in other forms of capital, such countries can benefit from these resources. Thus, examining the mechanism of how to rents affect economic growth through capital accumulation channels is of great importance. Because of the importance of management of resource rents in achieving sustainable growth and development in resource-rich countries, this paper investigates the impacts of resource rents on accumulation of four kinds of capital (foreign, physical, human and social capital) in Iran during 1970-2014. To this end, a simultaneous equations system consisting of various capital forms is designed, and estimated by using Seemingly Unrelated Regression estimator. According to the findings, resource rents have positive effects on accumulation of foreign, human and social capital in Iran. But it is of negative effect on accumulation of physical capital. The results show that physical capital is affected by natural resource rents more than other kinds of capital. This is because of unproductive government investments in physical capital, hence not only resource rents increase physical capital but also they affect physical capital negatively.

---

Poverty decomposition provides useful information about the factors affecting poverty and helps the politicians to choose suitable poverty reduction policies. In this context, sectoral decomposition (Ravallion-Huppi, 1991) and growth–­equality decomposition (Datte- Ravallion, 1992) are the most widely used methods for poverty decomposition. But the ambiguous elements (such as residual and interaction terms) existing in these methods resulted in developing a new decomposition method by Fujii (2014). His decomposition method is residual-free and has some desirable properties including time-reversion consistency, and sub-period additivity. In the present study, following Fujii (2014) and using Iran’s rural and urban household expenditure and income data, the poverty is decomposed into six components: population shift (PS), within-region redistribution (WR), between-region redistribution (BR), nominal growth (NG), inflation (IF), and methodological change (MC). The results show that population shift (PS), within-region redistribution (WR) and inflation components explain the highest portion of the poverty changes in the urban and rural areas. Based on the results, the pro-poor growth policies and immigration-reducing policies are recommended for reducing rural poverty, while the growth-oriented policies with redistribution are recommended for decreasing urban areas.  In all periods, inflation is the main poverty-increasing factor in both urban and rural areas; therefore, controlling inflation can reduce poverty rates.

---

Inequality is a major problem in the developing countries.  It is also an acute and critical subject in Iran compared with other developing economies.  Besides the existence of inequality, its social effects have made its explanation crucial. The aim of this research is to measure the multidimensional inequality in urban areas of Iran during three presidential periods: 1989 -1997, 1997-2005 and 2005-2013. Income, health and education are the dimensions under study. This research uses household expenditure-income survey data for the selected periods. Gini coefficient is measured for one-dimensional inequalities in terms of each dimension, generalized entropy is computed for the beginning and ending years of each period, and the multidimensional inequality is measured by using the Bourguignon index. Results indicate that the Gini coefficient decreased in terms of income dimension in all three periods while it increased in terms of health dimension during all periods. In education dimension, Gini index increased in the second period and decreased in other periods. The measured entropy indices are of some fluctuations in all periods for all dimensions. The measured multidimensional inequality index provides a wide range of results for different substitution and inequality aversion parameters. In general, this index indicates worse conditions in the second period compared with other periods.

---

The possible costs and benefits of trade liberalization generate essential problems for the developing countries and make free trade dubious. A major problem for developing countries is to create jobs in sectors supported indirectly by imposing import tariffs. This study aims to investigate the potential effects of the tariffs’ elimination of agricultural imports on the job creation of this sector and other sectors using 2011 input-output table.  For the whole economy, the results show that private sector experiences 5.5% and 9.81% reductions in direct and indirect employment, respectively. On the other hand, public sector faces with 2.63% and 4.59% reductions in direct and indirect employment, respectively. According to findings, the reduction in direct employment is bigger than that of indirect employment. 

---

In this study, the allocation of resources of National Development Fund (NDF) to economic sectors in foreign currency and Rial is evaluated by making a structural macro-econometric model that expresses the reality of Iran’s economy as much as possible. This model consists of 45 behavioral equations, 28 connecting equations and 88 identities. Behavioral equations are estimated by the ARDL approach in Eviews 9 software using annual data from 1959 to 2014. According to Theil’s U statistic and root mean square error (RMSPE), the simulation of endogenous variables indicates that model gives a good explanation of Iran’s economy mechanism. Regarding different scenarios for how to allocate resources of National Development Fund to different economic sectors, simulation results over the 2011-2014 period show that if 80% of NDF’s resources is distributed in proportion to the share of sector's investment in total investment in foreign currency and remaining 20% is allocated equally to agriculture and industry sectors in Rial, the highest rate of economic growth will be realized.

---

The consumption pattern of typical household is a combination of quantities, qualities, acts and tendencies describing use of resources for survival, comfort and enjoyment by society or a group of people. In this paper, we examine the impact of cash subsidies on expenditure pattern of households after implementing Subsidy Targeting Project at both urban and rural levels in Iran. We estimate a panel data model by applying data on household income and expenditure survey (HIES) during 2004-2014. Findings indicates that paying cash subsidies significantly affects all 14 expenditure categories in urban and rural households, except for health expenditure in rural households. Consequently, the shares of eight urban expenditure categories and nine rural expenditure ones have increased, while the shares of six urban expenditure categories and four rural expenditure ones have decreased. In all cases except for home durable goods, the shares of urban and rural expenditure categories, the shares of other household expenses and transfers changed in a same direction. In both urban and rural levels, all increased shares of expenditure are related to current household’ welfare, but the shares of categories which increases future household’ welfare have decreased. It seems changes in relative prices after paying cash subsidies have persuaded households to sacrifice some investment, education, and health expenditure for additional expenditure required for meeting basic needs.

---

This article attempts to examine the impact of stock market fluctuations on macroeconomic variables by designing a New Keynesian approach in a dynamic stochastic general equilibrium (DSGE) model. For this purpose, first, model parameters are estimated based on Bayesian approach and using of quarterly data from 1994 to 2014. Second, the impulse response functions of variables to innovations in stock price index, monetary shock, technology shock, consumer spending and public investment are investigated. Then, the optimal weights related to inflation gap, output gap and the stock price index gap within the monetary policy function are extracted. According to the results, a shock to stock price index has a negligible effect on inflation and output variables. This may be due to the small size of the stock market in Iran. Finally, the optimal coefficients are determined for inflation and output gaps, stock price index gap, and the central bank deadweight loss under various scenarios. Based on findings, first, the central bank should attribute more weight to inflation in itself reaction functions. Second, a scenario in which the weight of stock price index is zero has less deadweight loss, thus the response of the central bank to stock price index gap leads to a reduction in social welfare. Therefore, when the stock market is booming, the central bank is recommended not to be intervened to reduce liquidity.

---

Development of financial markets plays a major role in economic development. The present study estimates the effect of inflation on the relationship between financial development and employment using STR smooth transition regression model in Iran during 1992-2014. The results show that when inflation increases beyond threshold level, quasi-money negative effects on unemployment rate are intensified, and an increase in quasi-money has greater effect on increase in employment. Furthermore, increase in inflation rate and passing threshold level, and increase in capital market volume and domestic credit granted to private sector result in decreasing employment rate. The effect of monetary base on unemployment rate is positive in both regimes, but higher inflation (passing the threshold level of inflation) has intensified the positive effect of monetary base on unemployment rate. In other words, an increase in inflation rate has increased the monetary base, which in turn has reduced the employment level.

---

The real effective exchange rate and its uncertainty are among the most important macroeconomic variables that affect different economic sectors from various aspects. Since the changes in exchange rate have no identical impacts on all sectors of the economy and regarding considerable importance of industrial development on economic development, this study examines and evaluates the effects of real effective of exchange rate and its uncertainty on the value-added of industrial subsectors based on the two-digit codes ISIC-REV4 using Panel data and Engel-Granger methods during 1979-2014. The results show that the real effective exchange rate is of different effects on various subsectors of the industry while its uncertainty has no effect on sub-sectors’ value-added.  Consequently, there is no single exchange rate policy in industrial sector due to different foreign exchange requirements in its subsectors.

---

According to the Kau and Robin (K&R) hypothesis, an increase in the government's power to collect taxes increases the size of government. In this regard, the main objective of this paper is to test this hypothesis for the Iranian economy during the period of 1971-2014. For this purpose, two variables are used as indicators of government's power to collect taxes: rate of female participation in the labor market and self-employment rate. The estimation method is a canonical co-integration regression (CCR). The results indicate no significant impact of the mentioned indicators on the government size. Thus, Kau-Rubin hypothesis is rejected for the Iranian economy. The FMOLS and DOLS estimators reconfirm the results.

---

Smuggling is a part of informal economy with numerous negative effects on economy and government revenues. Using E-MIMIC method, this study tries to estimate an index of smuggling to Iran and to examine the causes and consequences of its growth. In order to trace the smuggling of imported goods, we consider the difference between imports and exports to Iran. The results show that sanctions, government intervention in exchange rate market, and real exchange rate are the most influential factors in smuggling. The estimated index shows that smuggling was low during the war and early post-war years due to great subsidies granted by the government to formal importers in the form of low exchange rates. Allocation of subsidized foreign currencies to importers resulted in low under-invoice or even over-invoice of imports in some years. However, over the 2000s, after unification of exchange rates and elimination of the foreign currency’ subsidy, the real size of smuggling increased 9.55% per annum, on average. In addition, the relative size of smuggling decreased due to higher growth rate in formal imports. The effect of sanctions was extremely significant. As a result of sanctions, smuggling increased from 24 percent of formal imports in 2010 to 60 percent in 2011 and 75 percent in 2014.

---

The exchange rate overshooting, which results from the monetary disruptions, has negative impact on production and investment in the main economic activities and de-stabilizes the whole economy because of their input-output linkages. Therefore, identifying the causes of economic instability can help to adopt appropriate policies and to create economic stability in the country. The main question is to what extent the exchange rate can cause instability in the economy. To answer this question, first, the exchange rate overshooting was calculated using the Hodrick- Prescott filtering method during 1989-2012. Then, it was introduced into the model by specifying the generalized Solow production function, and finally, the production function was estimated for the main activities of the economy using the panel data technique. The results show that the impact of the exchange rate overshooting on the major economic activities is negative.

---

The main goal of this paper is to analyze the exchange rate pass-through, the relationship between exchange rate and prices, provided that a shock occurs and changes exchange rate and prices. The key point in this study is that exchange rate is considered as an endogenous variable. This issue is important because exchange rate pass-through due to specific shocks differs from case to case. Hence a dynamic stochastic general equilibrium model is presented and simulated for Iran. The accuracy of the model is analyzed by comparing the moments of the model and the moments of the quarterly data from 1988 to 2010. Then, exchange rate pass-through conditional on each shock (technology, oil revenue, foreign output, and demand for money, foreign interest rate and monetary policy shocks) is calculated by the ratio of covariance of the impulse response of price and exchange rate to variance of the impulse response of exchange rate. Finally, aggregate exchange rate pass-through is computed as the sum of conditional pass-through coefficients in each time weighted by the contribution of each shock. The biggest exchange rate pass-through to consumer prices belongs to oil revenue and foreign output shocks which amounts to about 1, and the smallest one is related to technology shock.