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Dr Soheil Roudari, Dr Hamidreza Maghsoudi, Dr Farzaneh Ahmadian-Yazdi,
Volume 0, Issue 0 (12-2024)
Volume 0, Issue 0 (12-2024)
Abstract
Aim and Introduction
One of the most important issues in Iran's economy is related to managing the exchange rate, inflation and budget deficit. During tightening of the sanctions, the oil revenues are limited which potentially leads to an increase in the budget deficit as well as a decrease in the currency supply which accelerates the exchange rate. On the other hand, with the increase in the budget deficit, the probability of borrowing from the banking system and also the issuance of bonds increases, which in turn rise the monetary base and liquidity. In addition, inflationary expectations also increase, which can be effective in improving assets prices. With an increase in inflation, based on the inflation-currency spiral, there is a possibility of a grow in exchange rate in order to maintain the competitiveness of domestic production. This can accelerate the price of imported commodities and cause domestic inflation again. With the increase in inflation and households spending, nominal wages will have a higher growth compared to normal conditions in order to maintain minimum purchasing power, which can again face the government with limited resources and more borrowing to meet current expenses. From the monetarists’ point of view and the classical economics, in general, the main stimulator in increasing inflation is the growth of money and liquidity. However, from the post-Keynesian economists’ point of view, inflation increases the demand of money and subsequently liquidity. On the other hand, with an increase in the exchange rate, the government's expenses usually increase more than its income, which can lead to an increase in the government's budget deficit. Also, considering the existence of a monopoly in currency supply by the central bank, the hypothesis of using currency exchange revenues (the difference between free and budget-approved currency) will be applicable and this issue can raise the impact of the budget deficit on the exchange rate. Therefore, there has always been a serious challenge among economists as well as macroeconomic decision-makers about the connectedness between macroeconomic variables. What is the main driver of the network between macro variables? Is there a different way of communication in different thresholds of their growth rate? These cases show that it is very important to examine the time-varying interrelationships between these macroeconomic variables.
Accordingly, there is a complex connection between exchange rate, inflation, budget deficit and liquidity, which can be varied in different years. Therefore, in this research, using the TVP-TVAR technique, the time-varying connectedness across exchange rate, inflation, budget deficit and liquidity is examined during March, 2006 to August, 2023.
Methodology
In the current research, the relationship between exchange rate fluctuations, inflation, government budget deficit and liquidity based on monthly data using the TVP-TVAR technique is investigated. It should be noted that all the required information is extracted from the economic indicators of the central bank, and the government's budget deficit data from 2017 onward are extracted from Iran's Program and Budget Organization.
Findings
The results show that exchange rate and liquidity are, respectively, the largest net transmitter of volatilities in the network. Moreover, inflation rate and government budget deficit, respectively, are the largest net receivers of shocks from network. On average, the TCI is 23%, and more than 70% of this interrelationship between variables is explained by other factors such as political ones. Moreover, if the variables underestimated grow up to 36% annually (3% monthly), the connection between them will be cut off. In the conditions of decreasing the growth rate of variables up to -3% per month, the exchange rate has played a dominant role and its volatilities are transferred more strongly to inflation rate and less strongly to the budget deficit and liquidity.
If the growth rate of the variables is up to 24% annually (threshold of +2% monthly growth rate), the exchange rate volatilities are transferred to inflation and no interconnectedness between other variables is observed.
Discussion and Conclusion
Our results show that, on average, the total connectedness index from 2012 to 2016 has been upward, which is caused by the tightening of sanctions and the increase in inflationary expectations, psychological factors and emotions. Moreover, the connectedness between them is increased in 2018 and 2019, which is related to the intensification of sanctions and the reduction of currency supply and the increase in inflation and budget deficit and subsequently the increase in the issuance of debt securities in the capital market in order to manage the budget deficit and as a result increase liquidity. The results show that exchange rate is a main net transmitter of volatilities in most years and the inflation rate is a main net receiver of volatilities in many years. From 2016 onwards, the budget deficit is the net receiver of shocks from network in most periods, except for one period in 2019. It is interesting to note that in 2019, with the increase in the budget deficit and the issuance of debt securities, the budget deficit is transmitter, liquidity is receiver and inflation is more receiver variable than liquidity in the network. Totally, the results show that exchange rate is the major net transmitter of shocks to other macro variables.
Moreover, based on the results of the sensitivity analysis and thresholds effect, if the growth rate of variables is up to 24% annually (threshold of +2% monthly growth rate), the exchange rate fluctuations will be transferred to inflation and no connection between other components is observed. This shows that the macroeconomic management of the economy is very sensitive to the growth rate of the thresholds of the macroeconomic components, and before the political economy and also the factors of expectations and emotions dominated the economy, the macroeconomic management, especially the exchange rate, is required. Otherwise, it is impossible to manage the investigated variables with monetary and fiscal policies. Therefore, the managed floating exchange rate should be taken into consideration and if the goal is to manage the network using macroeconomic theories, the variables should not be allowed to increase by more than 24% annual growth. Other factors such as the political economy, and especially inflationary expectations will get the dominant role in the economy
One of the most important issues in Iran's economy is related to managing the exchange rate, inflation and budget deficit. During tightening of the sanctions, the oil revenues are limited which potentially leads to an increase in the budget deficit as well as a decrease in the currency supply which accelerates the exchange rate. On the other hand, with the increase in the budget deficit, the probability of borrowing from the banking system and also the issuance of bonds increases, which in turn rise the monetary base and liquidity. In addition, inflationary expectations also increase, which can be effective in improving assets prices. With an increase in inflation, based on the inflation-currency spiral, there is a possibility of a grow in exchange rate in order to maintain the competitiveness of domestic production. This can accelerate the price of imported commodities and cause domestic inflation again. With the increase in inflation and households spending, nominal wages will have a higher growth compared to normal conditions in order to maintain minimum purchasing power, which can again face the government with limited resources and more borrowing to meet current expenses. From the monetarists’ point of view and the classical economics, in general, the main stimulator in increasing inflation is the growth of money and liquidity. However, from the post-Keynesian economists’ point of view, inflation increases the demand of money and subsequently liquidity. On the other hand, with an increase in the exchange rate, the government's expenses usually increase more than its income, which can lead to an increase in the government's budget deficit. Also, considering the existence of a monopoly in currency supply by the central bank, the hypothesis of using currency exchange revenues (the difference between free and budget-approved currency) will be applicable and this issue can raise the impact of the budget deficit on the exchange rate. Therefore, there has always been a serious challenge among economists as well as macroeconomic decision-makers about the connectedness between macroeconomic variables. What is the main driver of the network between macro variables? Is there a different way of communication in different thresholds of their growth rate? These cases show that it is very important to examine the time-varying interrelationships between these macroeconomic variables.
Accordingly, there is a complex connection between exchange rate, inflation, budget deficit and liquidity, which can be varied in different years. Therefore, in this research, using the TVP-TVAR technique, the time-varying connectedness across exchange rate, inflation, budget deficit and liquidity is examined during March, 2006 to August, 2023.
Methodology
In the current research, the relationship between exchange rate fluctuations, inflation, government budget deficit and liquidity based on monthly data using the TVP-TVAR technique is investigated. It should be noted that all the required information is extracted from the economic indicators of the central bank, and the government's budget deficit data from 2017 onward are extracted from Iran's Program and Budget Organization.
Findings
The results show that exchange rate and liquidity are, respectively, the largest net transmitter of volatilities in the network. Moreover, inflation rate and government budget deficit, respectively, are the largest net receivers of shocks from network. On average, the TCI is 23%, and more than 70% of this interrelationship between variables is explained by other factors such as political ones. Moreover, if the variables underestimated grow up to 36% annually (3% monthly), the connection between them will be cut off. In the conditions of decreasing the growth rate of variables up to -3% per month, the exchange rate has played a dominant role and its volatilities are transferred more strongly to inflation rate and less strongly to the budget deficit and liquidity.
If the growth rate of the variables is up to 24% annually (threshold of +2% monthly growth rate), the exchange rate volatilities are transferred to inflation and no interconnectedness between other variables is observed.
Discussion and Conclusion
Our results show that, on average, the total connectedness index from 2012 to 2016 has been upward, which is caused by the tightening of sanctions and the increase in inflationary expectations, psychological factors and emotions. Moreover, the connectedness between them is increased in 2018 and 2019, which is related to the intensification of sanctions and the reduction of currency supply and the increase in inflation and budget deficit and subsequently the increase in the issuance of debt securities in the capital market in order to manage the budget deficit and as a result increase liquidity. The results show that exchange rate is a main net transmitter of volatilities in most years and the inflation rate is a main net receiver of volatilities in many years. From 2016 onwards, the budget deficit is the net receiver of shocks from network in most periods, except for one period in 2019. It is interesting to note that in 2019, with the increase in the budget deficit and the issuance of debt securities, the budget deficit is transmitter, liquidity is receiver and inflation is more receiver variable than liquidity in the network. Totally, the results show that exchange rate is the major net transmitter of shocks to other macro variables.
Moreover, based on the results of the sensitivity analysis and thresholds effect, if the growth rate of variables is up to 24% annually (threshold of +2% monthly growth rate), the exchange rate fluctuations will be transferred to inflation and no connection between other components is observed. This shows that the macroeconomic management of the economy is very sensitive to the growth rate of the thresholds of the macroeconomic components, and before the political economy and also the factors of expectations and emotions dominated the economy, the macroeconomic management, especially the exchange rate, is required. Otherwise, it is impossible to manage the investigated variables with monetary and fiscal policies. Therefore, the managed floating exchange rate should be taken into consideration and if the goal is to manage the network using macroeconomic theories, the variables should not be allowed to increase by more than 24% annual growth. Other factors such as the political economy, and especially inflationary expectations will get the dominant role in the economy
Mrs Saeideh Shahabi Rabori, Dr Sadegh Khalilian, Dr Seyed Habibollah Mosavi, Dr Hamed Najafi Alamdarlo,
Volume 0, Issue 0 (12-2024)
Volume 0, Issue 0 (12-2024)
Abstract
Aim and Introduction
Today, the environment is considered as one of the most important pillars of sustainable development, and the development of other economic and social sectors depends on its sustainability and proper functioning. Environmental pollution has become one of the main challenges of countries. Environmental health is currently one of the most critical concerns of people and officials round the world. Almost all managers and decision makers believe that this national wealth should be protected not only for the current generation but also for future generations, since the pollutants caused by industries are highly costly and detrimental to health.
Active industries are one of the main sources of environmental pollution. One of the necessary conditions for economic progress and the introduction of extensive structural changes in economic and technological fields is industrialization and industrial development. In the production process, using production inputs whose main source is the environment, in addition to desirable outputs such as consumer goods, undesirable outputs such as environmental pollutants are also produced. If the number of outputs is not controlled and disproportionate, the losses from undesirable outputs will be greater than the benefits of desirable products in such a way that damages to the environment would be irreparable and sustainable development less likely to be achieved.
One of the most important concerns related to industrialization is the effects and environmental consequences of industrial activities. Therefore, achieving the necessary solutions to control such consequences is vitally important. Minerals are essential for human survival, but their extraction and processing are not environmentally friendly practices which contribute to problems such as soil erosion, air and water pollution. On the other hand, mineral sector is one of the largest energy consumers which has active contribution to air pollution and global warming. The main purpose of this study is to investigate the economic effects of Gol Gohar mine in Sirjan. For this purpose, it is intended to determine the type and amount of pollutants released from this complex, and also to determine the amount of the green tax of the complex as a solution to reduce pollution and examine the social welfare resulting from reducing pollution.
Methodology
In this study, the economic effects of environmental pollutants of Gol Gohar Iron Mine in Sirjan (Southeastern Iran), is investigated using the input distance function model from 2001 to 2022. Through calculating the shadow price of pollutants, a criterion for determining the green tax is determined, and then the amount of social cost resulting from the emission of pollutants is calculated.
The shadow price of the undesirable output is the cost that the producer must bear if they plan to reduce the production of the undesirable output. In fact, it can be interpreted as the marginal cost of reducing pollution for each producer. Therefore, the shadow price of the desirable output is considered positive and equal to the market price of that output, but the shadow price of the undesirable output must be estimated to be less than zero.
Findings
The products of Gol Gohar Iron Ore Complex in Sirjan, include granulated iron ore, iron ore concentrate and pelletized in the production process. The most greenhouse gases and air pollutants are related to carbon dioxide (CO2), sulfur oxides (Sox), nitrogen oxides (Nox) and particulate matter (SPM). According to the obtained results, the average shadow price for air pollutants in Gol Gohar complex for CO2, Sox Nox, and SPM was calculated as 11.15, 3,074.5, 5,529.62, and 1,875.62 rials per kilogram respectively. Moreover, the average total social costs resulting from the production of Gol Gohar Sirjan Complex was calculated as 92,710 billion Rials according to the amount of pollution produced over the period.
Discussion and Conclusion
The estimation of environmental costs is actually an introduction to providing solutions for internalizing and reducing environmental costs, using the input distance function model and the shadow price of environmental pollutants in the industrial and mineral complex of Gol Gohar, Sirjan. The title of the largest producer of iron ore in the country was calculated, and the social cost resulting from the emission of pollutants was also evaluated. Finally, in this study, solutions and mechanisms for reducing environmental costs have been proposed.
Considering that the ability to absorb pollutants by the environment is limited, the shadow price of pollutants, which represents their real social cost, should be taken into consideration. The damages should also be determined based on the shadow price of the pollutants. In other words, the amounts of pollutant emission should be calculated and while taking into account the allowed limit of pollutant emission and shadow prices, based on a legal plan, the environmental costs should be reimbursed. Taking such measures would surely require more studies and capable executive management system
Mrs Roshanak Fani, Dr Hossein Raghfar,
Volume 0, Issue 0 (12-2024)
Volume 0, Issue 0 (12-2024)
Abstract
Aim and Introduction
This paper examines the distribution of income in Iran from 2006 to 2016 and evaluates the validity of one of the latest economic theories concerning income distribution, namely, the Econophysics Two-Class Theory of Income Distribution (EPTC).
According to this model, income distribution generally comprises two classes. The lower class of this distribution, typically representing 97 to 99% of th society, follows the exponential (thermal) Boltzmann-Gibbs distribution, primarily driven by labor income. This distribution remains stable over time and undergoes minimal fundamental changes. Conversely, the income distribution of the upper class, constituting approximately 1 to 3% of society, follows the Pareto distribution, recognized as a superthermal distribution in econophysics. Notably, this distribution exhibits high variability over time, closely mirroring fluctuations in the stock market.
For this study, a review of the theoretical literature on the statistical distribution of income is conducted, tracing its evolution from Pareto's initial attempts to the formulation of the two-class distribution of income. In the methodology section, emphasis is placed on delineating the characteristics of two Probability Density Functions (PDFs) and Complementary Cumulative Distribution Functions (CCDFs) associated with exponential and Pareto distributions. The methodology elaborates on the approach to detecting income distribution patterns within the framework of the aforementioned theory. Subsequently, in the data and findings section, an examination of the income data spanning the specified time period in Iran is undertaken. The section meticulously explores the compatibility of these data with the EPCT, offering detailed discussions on the observed patterns and their alignment with the theoretical framework. Finally, the implications of the EPCT are elucidated, and the paper's conclusions are presented in the concluding remarks section.
Methodology
In complex systems concluding big data or complex models, alternative approaches beyond conventional statistical tests may be employed to estimate distributions. Visual inspection and descriptive analysis, facilitated by histograms and distribution charts, serve as effective tools for approximating distributions without relying on statistical tests. The selection of distributions is informed by theoretical considerations that align with the underlying characteristics of the system. These alternative methods offer practicality and informativeness, particularly in scenarios where traditional statistical assumptions may not hold or when dealing with extensive and unconventional data. The present article adopts this methodological approach to analyze income distribution in Iran.
The initial step involves drawing the histogram and probability density function (PDF). The shape of the histogram guides the identification of distribution. Given the potential complexity arising from large datasets, and the ambiguity that may arise from visual inspection of merely the PDF, a Complementary Cumulative Distribution Function (CCDF) plot serves as a valuable aid. Subsequently, following the first step and the selection of candidate theoretical distributions, the CCDFs are plotted to ascertain the optimal fit with the experimental data distribution. Consequently, the combined use of PDF and CCDF serves as indispensable tools for delineating annual income distribution patterns.
The resemblance between the graphs of the PDF for both exponential and Pareto distributions on a linear-linear scale poses challenges in distinguishing between these distributions. Similarly, the CCDF curve lacks clarity on a linear-linear scale due to this similarity. However, employing a logarithmic-linear scale to plot the survival function related to the data of the lower part of society proves beneficial, as it reveals a smooth line representative of the exponential Boltzmann-Gibbs law. Similarly, plotting the survival function for the upper part of the society on a logarithmic-logarithmic scale serves to elucidate the Pareto power law. Consequently, plotting the survival function for the entire dataset on a logarithmic-logarithmic scale, as per the hypothesis of the EPTC, should unveil two distinct segments: exponential and Pareto.
Findings
The data utilized in this study were derived from the raw tables pertaining to the household expenditure-income (budget) plan, annually published by the Statistical Center of Iran. Specifically focusing on data sourced from the urban population, which constituted approximately three-quarters of the total population during the study period. Data preparation commenced with the meticulous removal of zero and negative values, followed by deflation adjustments based on the consumer price index. Subsequently, data normalization was conducted utilizing the slope of the line of the CCDF for the lower part of the dataset, plotted on a logarithmic-linear scale for each year. This normalization process was initiated based on the initial estimate of the border income, set at the 99.7th percentile. Finally, an appropriate binning strategy was selected, with a uniform value of 0.4 (∆r≈0.4T) applied to all data subsequent to the initial 0.2 portion.
Plotting the PDF of the income pertaining to the lower class of the society across three scales—linear-linear, logarithmic-linear, and logarithmic-logarithmic—alongside the fitting line of the exponential distribution function for the year 2016 revealed a notable alignment, indicative of a robust fit with the theoretical exponential distribution.
Alternatively, the survival function chart was employed to analyze the income distribution among the upper class of society. Presenting this data graphically across three scales—linear-linear, logarithmic-linear, and logarithmic-logarithmic—for the entirety of 2016 underscored two key findings. Firstly, the tail-end distribution of income follows the Pareto distribution. Secondly, and of paramount significance, these graphical representations unequivocally affirmed the appropriateness of dividing the dataset into two distinct segments.
Plotting the PDF for the 11-year period revealed that the data pertaining to the lower part of the society, representing 99.7% of the total population, converged onto a singular curve following normalization across the entire duration under study. Subsequently, depicting the survival functions for the aforementioned 11-year time frame in a unified graph, utilizing both logarithmic-linear and logarithmic-logarithmic scales, served as a more definitive validation of the two-class theory of income distribution.
Discussion and Conclusion
The analysis of income data in Iran from 2006 to 2016 reveals a distinct two-class structure in the country's income distribution.
Firstly, the lower class, encompassing approximately 97 to 99.7% of the population, follows the exponential Boltzmann-Gibbs distribution, primarily driven by labor income. This statistical distribution reflects a cumulative process characterized by a constant rate of decrease, as indicated by the exponential distribution's parameter. The consistency observed in the exponential fit graphs of the survival function and data histogram across different years suggests the stability of income distribution within the lower class over time. This stability parallels thermal equilibrium in physics, suggesting that the majority of the population is in a stable equilibrium. Notably, the high-resolution histogram of the PDF reveals a sharp and narrow peak at low incomes, attributed to governmental policies such as the imposition of minimum wage regulations.
Conversely, the upper class, constituting approximately 0.3 to 3% of the population, follows a Pareto distribution, predominantly influenced by capital income. However, unlike the lower class, the distribution of income within this part does not align along a single line in the power law segment. This part undergoes discernible fluctuations from year to year, indicating instability within this economic sector. These fluctuations are attributed to the variability of capital income
This paper examines the distribution of income in Iran from 2006 to 2016 and evaluates the validity of one of the latest economic theories concerning income distribution, namely, the Econophysics Two-Class Theory of Income Distribution (EPTC).
According to this model, income distribution generally comprises two classes. The lower class of this distribution, typically representing 97 to 99% of th society, follows the exponential (thermal) Boltzmann-Gibbs distribution, primarily driven by labor income. This distribution remains stable over time and undergoes minimal fundamental changes. Conversely, the income distribution of the upper class, constituting approximately 1 to 3% of society, follows the Pareto distribution, recognized as a superthermal distribution in econophysics. Notably, this distribution exhibits high variability over time, closely mirroring fluctuations in the stock market.
For this study, a review of the theoretical literature on the statistical distribution of income is conducted, tracing its evolution from Pareto's initial attempts to the formulation of the two-class distribution of income. In the methodology section, emphasis is placed on delineating the characteristics of two Probability Density Functions (PDFs) and Complementary Cumulative Distribution Functions (CCDFs) associated with exponential and Pareto distributions. The methodology elaborates on the approach to detecting income distribution patterns within the framework of the aforementioned theory. Subsequently, in the data and findings section, an examination of the income data spanning the specified time period in Iran is undertaken. The section meticulously explores the compatibility of these data with the EPCT, offering detailed discussions on the observed patterns and their alignment with the theoretical framework. Finally, the implications of the EPCT are elucidated, and the paper's conclusions are presented in the concluding remarks section.
Methodology
In complex systems concluding big data or complex models, alternative approaches beyond conventional statistical tests may be employed to estimate distributions. Visual inspection and descriptive analysis, facilitated by histograms and distribution charts, serve as effective tools for approximating distributions without relying on statistical tests. The selection of distributions is informed by theoretical considerations that align with the underlying characteristics of the system. These alternative methods offer practicality and informativeness, particularly in scenarios where traditional statistical assumptions may not hold or when dealing with extensive and unconventional data. The present article adopts this methodological approach to analyze income distribution in Iran.
The initial step involves drawing the histogram and probability density function (PDF). The shape of the histogram guides the identification of distribution. Given the potential complexity arising from large datasets, and the ambiguity that may arise from visual inspection of merely the PDF, a Complementary Cumulative Distribution Function (CCDF) plot serves as a valuable aid. Subsequently, following the first step and the selection of candidate theoretical distributions, the CCDFs are plotted to ascertain the optimal fit with the experimental data distribution. Consequently, the combined use of PDF and CCDF serves as indispensable tools for delineating annual income distribution patterns.
The resemblance between the graphs of the PDF for both exponential and Pareto distributions on a linear-linear scale poses challenges in distinguishing between these distributions. Similarly, the CCDF curve lacks clarity on a linear-linear scale due to this similarity. However, employing a logarithmic-linear scale to plot the survival function related to the data of the lower part of society proves beneficial, as it reveals a smooth line representative of the exponential Boltzmann-Gibbs law. Similarly, plotting the survival function for the upper part of the society on a logarithmic-logarithmic scale serves to elucidate the Pareto power law. Consequently, plotting the survival function for the entire dataset on a logarithmic-logarithmic scale, as per the hypothesis of the EPTC, should unveil two distinct segments: exponential and Pareto.
Findings
The data utilized in this study were derived from the raw tables pertaining to the household expenditure-income (budget) plan, annually published by the Statistical Center of Iran. Specifically focusing on data sourced from the urban population, which constituted approximately three-quarters of the total population during the study period. Data preparation commenced with the meticulous removal of zero and negative values, followed by deflation adjustments based on the consumer price index. Subsequently, data normalization was conducted utilizing the slope of the line of the CCDF for the lower part of the dataset, plotted on a logarithmic-linear scale for each year. This normalization process was initiated based on the initial estimate of the border income, set at the 99.7th percentile. Finally, an appropriate binning strategy was selected, with a uniform value of 0.4 (∆r≈0.4T) applied to all data subsequent to the initial 0.2 portion.
Plotting the PDF of the income pertaining to the lower class of the society across three scales—linear-linear, logarithmic-linear, and logarithmic-logarithmic—alongside the fitting line of the exponential distribution function for the year 2016 revealed a notable alignment, indicative of a robust fit with the theoretical exponential distribution.
Alternatively, the survival function chart was employed to analyze the income distribution among the upper class of society. Presenting this data graphically across three scales—linear-linear, logarithmic-linear, and logarithmic-logarithmic—for the entirety of 2016 underscored two key findings. Firstly, the tail-end distribution of income follows the Pareto distribution. Secondly, and of paramount significance, these graphical representations unequivocally affirmed the appropriateness of dividing the dataset into two distinct segments.
Plotting the PDF for the 11-year period revealed that the data pertaining to the lower part of the society, representing 99.7% of the total population, converged onto a singular curve following normalization across the entire duration under study. Subsequently, depicting the survival functions for the aforementioned 11-year time frame in a unified graph, utilizing both logarithmic-linear and logarithmic-logarithmic scales, served as a more definitive validation of the two-class theory of income distribution.
Discussion and Conclusion
The analysis of income data in Iran from 2006 to 2016 reveals a distinct two-class structure in the country's income distribution.
Firstly, the lower class, encompassing approximately 97 to 99.7% of the population, follows the exponential Boltzmann-Gibbs distribution, primarily driven by labor income. This statistical distribution reflects a cumulative process characterized by a constant rate of decrease, as indicated by the exponential distribution's parameter. The consistency observed in the exponential fit graphs of the survival function and data histogram across different years suggests the stability of income distribution within the lower class over time. This stability parallels thermal equilibrium in physics, suggesting that the majority of the population is in a stable equilibrium. Notably, the high-resolution histogram of the PDF reveals a sharp and narrow peak at low incomes, attributed to governmental policies such as the imposition of minimum wage regulations.
Conversely, the upper class, constituting approximately 0.3 to 3% of the population, follows a Pareto distribution, predominantly influenced by capital income. However, unlike the lower class, the distribution of income within this part does not align along a single line in the power law segment. This part undergoes discernible fluctuations from year to year, indicating instability within this economic sector. These fluctuations are attributed to the variability of capital income
Dr Farideh Khodadadi, Dr Hossein Samsami,
Volume 0, Issue 0 (12-2024)
Volume 0, Issue 0 (12-2024)
Abstract
Aim and Introduction
The financial sector has seen considerable growth in many post World War II western economies. The consequences of the Great Financial Crisis of 2007-2009 displayed how large the reach of the industry is, and how actions taken by a few important role players, can harm the general public. It is due to the consequences of the Great Financial Crisis that the notion of reforming the banking sector came about. The call for reform occurred in the 1940s as well, after the Great Crash. It was here that Full Reserve Banking (FRB), the broad term for the proposed banking reform and the subject of this dissertation, originated.
The Great Crash ended a period of expansion and growth in the USA in the 1920s where credit was easily available, and the money supply grew. The subsequent Great Depression was an economic event of unprecedented dimensions (Temin, 2000). The years 1929-1933 held a stock market crash, a banking crisis, and a collapse of commodity prices. Friedman and Schwartz (1963) contended that the primary propagation mechanism of the Depression was the contraction in the US money supply, together with banking panics. There were three banking crises in that short period, and it was the failure of two large banks, the Bank of United States and Caldwell and Company, that caused most of the problem. These banks had undergone rapid credit expansion in the 1920s and collapsed under the pressure of the recession (Temin, 2000: 307). A response to the recession was to say that the root cause was bad banking practice and that stricter regulations should be imposed to prevent future crises. Regulation was introduced in The Glass-Steagall Act (1933) however, a more severe suggestion was that bank deposits should be fully backed by bank reserves, Full Reserve Banking, an approach proposed in the Chicago Plan.
The Chicago Plan was proposed by Henry Simons, Irving Fisher and others, to prevent another crisis. It proposed requiring banks to hold 100 per cent reserves. This would simultaneously curb the possibility of reckless lending, and eliminate the risk of bank runs, thereby eliminating the possibility of another banking crisis.
Over the past years, the nominal capacity of the supply of bank facilities has increased significantly, and the main increase in bank assets has come from the increase in granting facilities. On the liabilities side of the banks' balance sheets, non-governmental sector deposits (due to paying high interest rates to depositors) during the year 2013 to 2022 has increased by 33.6% on average.
Statistical evidence shows that the real sector of the economy has not benefited much from the expansion of the banking network's balance sheet and the allocation of bank resources has not led to economic growth. On the other hand, it can be seen that the liquidity created by the banking system has not been absorbed by the real sector of the economy and its effects have been manifested in nominal variables in the form of price increases or turbulences in the currency market and other assets. The average growth of real GDP (without oil) during the years 2013 to 2022 was about 1.6 percent.
In general, it can be seen that due to the endogenous nature of money, the central bank has not had a significant success in controlling the growth of monetary aggregates through controlling the growth of the monetary base and its components (statistical evidence in recent decades confirms this); So that the credibility of the central bank's monetary policies has been challenged and the economy has been exposed to continuous threats of inflation and monetary and financial instabilities.
Methodology
This study will employ several techniques for gathering data, including a library type, a documentary branch, and the use of databases, such as those of the Central Bank of the Islamic Republic of Iran and the World Bank. Based on the characteristics of the Iranian economy under fractional & full reserve banking, a random dynamic general equilibrium model was developed for the period 1991-2021. Typical econometric methods are also used to evaluate the hypotheses. This has enabled assessing the effects of the exchange rate shock under two scenarios. It should be noted that the models were estimated in the dynare program space under MATLAB software.
Findings
The exchange rate shock has a negative effect on the consumption of the private sector at real prices, probably due to an increase in import prices. This has led to a decrease in the import of goods. Since imports form a part of the consumption for the private sector, therefore, the consumption by this sector decreases by about 0.5 percent. The Exchange rate shock has had a positive effect on the net foreign exchange reserves of the central bank. The growth rate of the monetary base is also affected by the currency shocks. With the increase in the exchange rate, although the central bank first reacts to the inflationary conditions resulting from the currency shocks through the currency reaction function and reduces the base monetary growth rate, but this situation is not very durable and finally the monetary base growth rate will increase by about 0.4 percent.
If these resources enter the banking system, due to the 100 percent reserve, it has led to the crediting of the banks, and as a result, inflation and final costs have decreased. But in fractional reserve banking, banks create money by attracting deposits, which in turn creates money by them. As a result of this jump, inflation and the final cost will increase.
The exchange rate shock also increases inflation because with the increase in the nominal growth rate of the exchange rate, the marginal cost of each import unit increases and finally the country's inflation increases by 0.7 percent.
Discussion and Conclusion
The purpose of this research is to investigate the effects of exchange rate impulse on the macroeconomic variables of Iran's economy in the conditions of partial and full reserve banking. To achieve this goal, a new Keynesian stochastic dynamic general equilibrium model was designed considering fractional and full reserve banking system (FRB). The realities of the Iranian economy are considered, and then the effects of exchange rate shocks under two types of banking are investigated. After determining the input values of the model and estimating the parameters using the seasonal data of Iran's economy during the period of 1991-2022 using the Bayesian estimation method, the results obtained from the simulation of the model variables indicate the validity of the model in describing the fluctuations of the Iranian economy. The results of the model indicate that, as a result of the exchange rate shock, the growth rate of the monetary base and consequently the amount of money is affected. Under full reserve banking, due to the full reserve of deposits, this has led to a lower increase in inflation and final cost. However, in partial reserve banking, due to the less control of the banking system, despite having two tools to control the growth of the monetary base and the nominal exchange rate, it will create higher fluctuations in the inflation rate and other macroeconomic variables. In other words, the study model has been slightly different from the basic model in the face of the currency impulse, both in terms of the amplitude and the length of the fluctuation
The financial sector has seen considerable growth in many post World War II western economies. The consequences of the Great Financial Crisis of 2007-2009 displayed how large the reach of the industry is, and how actions taken by a few important role players, can harm the general public. It is due to the consequences of the Great Financial Crisis that the notion of reforming the banking sector came about. The call for reform occurred in the 1940s as well, after the Great Crash. It was here that Full Reserve Banking (FRB), the broad term for the proposed banking reform and the subject of this dissertation, originated.
The Great Crash ended a period of expansion and growth in the USA in the 1920s where credit was easily available, and the money supply grew. The subsequent Great Depression was an economic event of unprecedented dimensions (Temin, 2000). The years 1929-1933 held a stock market crash, a banking crisis, and a collapse of commodity prices. Friedman and Schwartz (1963) contended that the primary propagation mechanism of the Depression was the contraction in the US money supply, together with banking panics. There were three banking crises in that short period, and it was the failure of two large banks, the Bank of United States and Caldwell and Company, that caused most of the problem. These banks had undergone rapid credit expansion in the 1920s and collapsed under the pressure of the recession (Temin, 2000: 307). A response to the recession was to say that the root cause was bad banking practice and that stricter regulations should be imposed to prevent future crises. Regulation was introduced in The Glass-Steagall Act (1933) however, a more severe suggestion was that bank deposits should be fully backed by bank reserves, Full Reserve Banking, an approach proposed in the Chicago Plan.
The Chicago Plan was proposed by Henry Simons, Irving Fisher and others, to prevent another crisis. It proposed requiring banks to hold 100 per cent reserves. This would simultaneously curb the possibility of reckless lending, and eliminate the risk of bank runs, thereby eliminating the possibility of another banking crisis.
Over the past years, the nominal capacity of the supply of bank facilities has increased significantly, and the main increase in bank assets has come from the increase in granting facilities. On the liabilities side of the banks' balance sheets, non-governmental sector deposits (due to paying high interest rates to depositors) during the year 2013 to 2022 has increased by 33.6% on average.
Statistical evidence shows that the real sector of the economy has not benefited much from the expansion of the banking network's balance sheet and the allocation of bank resources has not led to economic growth. On the other hand, it can be seen that the liquidity created by the banking system has not been absorbed by the real sector of the economy and its effects have been manifested in nominal variables in the form of price increases or turbulences in the currency market and other assets. The average growth of real GDP (without oil) during the years 2013 to 2022 was about 1.6 percent.
In general, it can be seen that due to the endogenous nature of money, the central bank has not had a significant success in controlling the growth of monetary aggregates through controlling the growth of the monetary base and its components (statistical evidence in recent decades confirms this); So that the credibility of the central bank's monetary policies has been challenged and the economy has been exposed to continuous threats of inflation and monetary and financial instabilities.
Methodology
This study will employ several techniques for gathering data, including a library type, a documentary branch, and the use of databases, such as those of the Central Bank of the Islamic Republic of Iran and the World Bank. Based on the characteristics of the Iranian economy under fractional & full reserve banking, a random dynamic general equilibrium model was developed for the period 1991-2021. Typical econometric methods are also used to evaluate the hypotheses. This has enabled assessing the effects of the exchange rate shock under two scenarios. It should be noted that the models were estimated in the dynare program space under MATLAB software.
Findings
The exchange rate shock has a negative effect on the consumption of the private sector at real prices, probably due to an increase in import prices. This has led to a decrease in the import of goods. Since imports form a part of the consumption for the private sector, therefore, the consumption by this sector decreases by about 0.5 percent. The Exchange rate shock has had a positive effect on the net foreign exchange reserves of the central bank. The growth rate of the monetary base is also affected by the currency shocks. With the increase in the exchange rate, although the central bank first reacts to the inflationary conditions resulting from the currency shocks through the currency reaction function and reduces the base monetary growth rate, but this situation is not very durable and finally the monetary base growth rate will increase by about 0.4 percent.
If these resources enter the banking system, due to the 100 percent reserve, it has led to the crediting of the banks, and as a result, inflation and final costs have decreased. But in fractional reserve banking, banks create money by attracting deposits, which in turn creates money by them. As a result of this jump, inflation and the final cost will increase.
The exchange rate shock also increases inflation because with the increase in the nominal growth rate of the exchange rate, the marginal cost of each import unit increases and finally the country's inflation increases by 0.7 percent.
Discussion and Conclusion
The purpose of this research is to investigate the effects of exchange rate impulse on the macroeconomic variables of Iran's economy in the conditions of partial and full reserve banking. To achieve this goal, a new Keynesian stochastic dynamic general equilibrium model was designed considering fractional and full reserve banking system (FRB). The realities of the Iranian economy are considered, and then the effects of exchange rate shocks under two types of banking are investigated. After determining the input values of the model and estimating the parameters using the seasonal data of Iran's economy during the period of 1991-2022 using the Bayesian estimation method, the results obtained from the simulation of the model variables indicate the validity of the model in describing the fluctuations of the Iranian economy. The results of the model indicate that, as a result of the exchange rate shock, the growth rate of the monetary base and consequently the amount of money is affected. Under full reserve banking, due to the full reserve of deposits, this has led to a lower increase in inflation and final cost. However, in partial reserve banking, due to the less control of the banking system, despite having two tools to control the growth of the monetary base and the nominal exchange rate, it will create higher fluctuations in the inflation rate and other macroeconomic variables. In other words, the study model has been slightly different from the basic model in the face of the currency impulse, both in terms of the amplitude and the length of the fluctuation
Mr Abolfazl Dehghani, Dr Kazem Yavari, Dr Mehdi Haj Amini, Dr Mohammad Hassan Zare,
Volume 0, Issue 0 (12-2024)
Volume 0, Issue 0 (12-2024)
Abstract
Aim and Introduction
Measurement and examination of unobservable variables directly such as inflation expectations or potential output, is really challenging. Inflation expectations have been considered a key variable in many macroeconomic models, particularly in the realm of monetary economics. Macroeconomic models assume that economic agents make consumption, savings, and labor market decisions based on their perception of future inflation levels, and these decisions play a great role in realizing economic variables, including inflation. The role of inflation expectations differs from other inflation-generating factors. While factors such as money supply, budget deficit, exchange rate, and to some extent, economic sanctions can be considered as policy tools. Inflation expectations normally result from the interaction of other factors and may potentially predict future inflation. For example, an increase in the budget deficit, if not addressed independently by the Central Bank, can lead to an increase in money supply, inflation, and intensification of inflation expectations. Thus, inflation expectations can be considered as a variable that evolves within society and changes due to other inflation-generating factors. However, once formed, these expectations themselves become significant factors in inflation and other economic variables. Unlike many countries, in Iran, despite the importance of inflation due to decades of double-digit inflation, no action has been taken to produce and provide survey data related to this variable. However, according to existing literature, comparing the results of alternative methods incorporating inflation expectations with survey data can provide valuable insights. In practice, incorporating inflation expectations can improve the performance of inflation prediction models.
Methodology
Empirical research indicates that methods that consider inflation expectations along with its fluctuations and dynamics outperform models that do not consider these dynamics. Therefore, paying proper attention to how inflation expectations form and fluctuate, as well as avoiding simple methods, is necessary in calculating inflation expectations. In this research, an attempt was made to calculate and present data related to this variable in the framework of rational expectations for the period of 1996 to 2021 using the random forest regression method, considering the strengths and weaknesses of each method of mapping inflation expectations. Subsequently, after learning the random forest-based model, by conducting an in-sample prediction, the data were extracted and the features related to rational expectations regarding these data were examined.
Findings
The coefficient of determination value for the test data was found to be 80%, indicating that, on average, 80% of inflation variations are correctly predicted by economic factors using the model inputs or features. Based on this and by examining the features related to estimation residuals, it was determined that economic factors in predicting inflation do not exhibit systematic errors and, with a sufficiently large time interval and having an adequate information set, can have a proper understanding of inflation behavior. Moreover, the results of comparing inflation expectations based on random forest regression-based predictions show superiority of this approach compared to competing methods such as the Hodrick-Prescott filter. After that, the importance of each of the factors in the basket of information related to inflation expectations was ranked. It should be noted that the selection of features for predicting inflation expectations was not based on the direct attention of households and economic factors to these features. Rather, economic factors and households may find the effect of these features in other evidence. For example, the effect of an increase in the exchange rate on the prices of goods that are somehow related to this variable may be apparent to households, and fundamentally, the prevalent interpretation of rational expectations in the literature of this field is based on this approach. The results of this ranking indicate that among the entire information set, factors such as inflation breaks, exchange rates, and economic sanctions had the highest importance in shaping inflation expectations.
Discussion and Conclusion
It is worth mentioning that inflation breaks have been identified as the most important factor among the entire information set as a manifestation of the adaptive section of inflation expectations. However, this does not mean that expectations are entirely adaptive. Based on the research findings, it is clear that if economic factors rely solely on the adaptive section to predict inflation, zero estimation error, unpredictability of errors, and consequently the formation of rational expectations will not be achieved. Using a combination of three approaches: gradient boosting algorithm, random forest algorithm, and linear regression, a voting regression was also performed, showing a 3% improvement in determination coefficient compared to random forest (83%). Moreover, other results, such as the order and intensity of feature importance, and predicted inflation values, are similar to the random forest method with slight variations which means, estimating rational expectations is reliable
Measurement and examination of unobservable variables directly such as inflation expectations or potential output, is really challenging. Inflation expectations have been considered a key variable in many macroeconomic models, particularly in the realm of monetary economics. Macroeconomic models assume that economic agents make consumption, savings, and labor market decisions based on their perception of future inflation levels, and these decisions play a great role in realizing economic variables, including inflation. The role of inflation expectations differs from other inflation-generating factors. While factors such as money supply, budget deficit, exchange rate, and to some extent, economic sanctions can be considered as policy tools. Inflation expectations normally result from the interaction of other factors and may potentially predict future inflation. For example, an increase in the budget deficit, if not addressed independently by the Central Bank, can lead to an increase in money supply, inflation, and intensification of inflation expectations. Thus, inflation expectations can be considered as a variable that evolves within society and changes due to other inflation-generating factors. However, once formed, these expectations themselves become significant factors in inflation and other economic variables. Unlike many countries, in Iran, despite the importance of inflation due to decades of double-digit inflation, no action has been taken to produce and provide survey data related to this variable. However, according to existing literature, comparing the results of alternative methods incorporating inflation expectations with survey data can provide valuable insights. In practice, incorporating inflation expectations can improve the performance of inflation prediction models.
Methodology
Empirical research indicates that methods that consider inflation expectations along with its fluctuations and dynamics outperform models that do not consider these dynamics. Therefore, paying proper attention to how inflation expectations form and fluctuate, as well as avoiding simple methods, is necessary in calculating inflation expectations. In this research, an attempt was made to calculate and present data related to this variable in the framework of rational expectations for the period of 1996 to 2021 using the random forest regression method, considering the strengths and weaknesses of each method of mapping inflation expectations. Subsequently, after learning the random forest-based model, by conducting an in-sample prediction, the data were extracted and the features related to rational expectations regarding these data were examined.
Findings
The coefficient of determination value for the test data was found to be 80%, indicating that, on average, 80% of inflation variations are correctly predicted by economic factors using the model inputs or features. Based on this and by examining the features related to estimation residuals, it was determined that economic factors in predicting inflation do not exhibit systematic errors and, with a sufficiently large time interval and having an adequate information set, can have a proper understanding of inflation behavior. Moreover, the results of comparing inflation expectations based on random forest regression-based predictions show superiority of this approach compared to competing methods such as the Hodrick-Prescott filter. After that, the importance of each of the factors in the basket of information related to inflation expectations was ranked. It should be noted that the selection of features for predicting inflation expectations was not based on the direct attention of households and economic factors to these features. Rather, economic factors and households may find the effect of these features in other evidence. For example, the effect of an increase in the exchange rate on the prices of goods that are somehow related to this variable may be apparent to households, and fundamentally, the prevalent interpretation of rational expectations in the literature of this field is based on this approach. The results of this ranking indicate that among the entire information set, factors such as inflation breaks, exchange rates, and economic sanctions had the highest importance in shaping inflation expectations.
Discussion and Conclusion
It is worth mentioning that inflation breaks have been identified as the most important factor among the entire information set as a manifestation of the adaptive section of inflation expectations. However, this does not mean that expectations are entirely adaptive. Based on the research findings, it is clear that if economic factors rely solely on the adaptive section to predict inflation, zero estimation error, unpredictability of errors, and consequently the formation of rational expectations will not be achieved. Using a combination of three approaches: gradient boosting algorithm, random forest algorithm, and linear regression, a voting regression was also performed, showing a 3% improvement in determination coefficient compared to random forest (83%). Moreover, other results, such as the order and intensity of feature importance, and predicted inflation values, are similar to the random forest method with slight variations which means, estimating rational expectations is reliable
Mrs Anise Amini, Dr Saman Ghaderi,
Volume 0, Issue 0 (12-2024)
Volume 0, Issue 0 (12-2024)
Abstract
Aim and Introduction
Economic globalization has many economic benefits, but it has also been accompanied by environmental challenges that have increased concern about the impact of these trends on the environment. Environmental welfare plays a key role in the organization of societies and drawing attention to environmental issues as one of the main dimensions of sustainability. This is also true for the development structures and decisions related to the environment. The purpose of the present study is to investigate the impact of economic globalization on environmental well-being in developed and developing countries during the years 2000 to 2020 using soft panel regression. The results show the existence of a non-linear relationship between the research variables. For developed and developing countries, a transfer function and two threshold limits, representing a two-regime model, were also chosen as the optimal model. The slope factor for developed and developing countries was equal to 1.28 and 159.78 respectively. The results of the model estimation indicate that in developed countries, the variable of economic globalization has a negative effect on environmental welfare in the first extreme regime and a positive and significant effect in the second extreme regime. In developing countries, the variable of economic globalization has also a negative and significant effect on environmental well-being in both regimes. On the other hand, in developed countries, for the first limit regime, economic globalization may lead to an increase in unsustainable use of resources and environmental pollution. But in the second extreme regime, it can promote the improvement of international cooperation in the field of environmental protection and the development of clean and green technologies. In developing countries, increased economic globalization may lead to increased industrial pressures and inappropriate use of natural resources, which causes damages to the environment and rampant pollution. Due to technical, financial, and regulatory constraints, these countries may not be able to take advantage of the benefits of globalization in a positive way for the environment and thus have a negative impact on environmental well-being. According to the research results, with the development of technology and industrial control, along with sustainable policies, it is possible to ensure the improvement of environmental well-being and strengthen the positive effect of economic globalization on environmental well-being.
Methodology
This study examines the impact of globalization on environmental well-being in developed and developing countries (133 countries) for the period 2000-2020 using the panel smooth transition regression (PSTR) model. Statistical tables, global databases, data from the Swiss Economic Institute KOF, and the Social Science Institute (SSI) - TH Köln website were used to collect statistics and quantitative information. The environmental welfare variable in this research as a dependent variable is the geometric mean of seven indicators of biodiversity, renewable water resources, energy consumption, energy efficiency, energy reserves, greenhouse gases and renewable energy. Economic globalization is considered as a transition variable, and to better explain the issues of GDP per capita growth (percentage per annum), general government final consumption expenditure (percentage of GDP), foreign direct investment, net inflows (percentage of GDP) and population growth (percentage per annum) were selected as influential factors. PSTR as a statistical model is usually used to analyze non-linear relationships between economic variables, especially to investigate non-linear patterns or changes in the behavior of variables over time. This flexible model can depict complex relationships between different variables and is known as a popular choice in various fields such as economics, finance and social science. The model is an extension of the smooth transition regression (STR) that allows the determination of the transition function between two different regimes. With PSTR, the transfer function is extended for panel data, which allows the analysis of nonlinear relationships between variables in multiple units, such as countries or firms, over time. PSTR is a powerful tool for analyzing the impact of various economic factors on different regions or countries and can be used to examine the impact of a specific economic policy or event on different regions. PSTR can also be used for different types of data such as cross-sectional, time series and panel data, which makes it a versatile tool for analyzing various economic phenomena.
Findings
The research shows the estimated results of the model upon which the slope parameter, which expresses the speed of adjustment from one regime to another, is equal to 1.28 and 159.78 for developed and developing countries, respectively, i.e, the transition from linear regime to non-linear regime in developed countries is done at a much lower speed than in developing countries. The estimation of the model shows the nonlinear relationship in two threshold points for developed countries c_1=79.5617 and c_2=85.0326 and c = (79.56+85.03)/2 = 82.29 also for developing countries c_1= 50.6518 and c_2 = 62.4416 and c = (50.65+62.44) /2 = 56.54 and the transfer function is in two regimes. If the economic globalization exceeds 82.29 in developed countries and 56.54 in developing countries, the behavior of the variables will be according to the second regime, and if it is less than the above threshold, they will be in the first regime.
In developed countries, the coefficients are such that the variable of economic globalization has a negative and significant effect on environmental welfare in the first limit regime and a positive and significant effect in the second limit regime. GDP per capita growth has a positive and non-significant effect on environmental well-being in the first limit regime and a significant negative effect in the second limit regime. Government size and population growth have also a positive effect in the first limit regime and a negative and significant effect in the second limit regime. Foreign direct investment in both regimes has a negative and insignificant effect on environmental well-being.
In developing countries, the coefficients are such that the variable of economic globalization, the growth of GDP per capita in both marginal regimes has a negative and significant effect, as well as the size of the government and population growth in both marginal regimes have a negative and insignificant effect on the dependent variable (welfare). Foreign direct investment has also a positive and insignificant effect in the first limit regime and a negative and significant effect in the second limit regime on environmental well-being.
Discussion and Conclusion
The results of the research show that the impact of various factors on environmental well-being in developed and developing countries is different from each other. These differences may be due to different economic, social, and cultural conditions in these countries.
In developed countries in the first limit regime, economic globalization leads to an increase in economic pressures and international competition, which can cause more use of natural resources, increase the production of pollutants, and decrease the quality of the environment. Moreover, in the second extreme regime, the Economic globalization variable has a positive and significant effect on environmental well-being. This may be due to increased access to advanced technologies, higher environmental standards, and increased international cooperation in environmental protection.
In developing countries, economic globalization variables have a negative effect on environmental well-being in both regimes. In other words, the increase of these variables in both limit regimes leads to a decrease in the quality of the environment and environmental well-being. In other words, economic globalization leads to an increase in the per capita production and consumption of energy and natural resources, which can lead to air and water pollution, a decrease in biodiversity, and a reduction in air and water quality.
In general, it can be concluded that in developed countries, increasing economic growth, government size, and population growth lead to improved environmental conditions, but in developing countries, these factors usually cause a decrease in environmental quality and environmental well-being. For the optimal management of environmental welfare in any country, it is necessary to pay attention to the economic, social and cultural conditions of that country. It is also vitally important to formulate appropriate policies and strategies to deal with environmental challenges
Economic globalization has many economic benefits, but it has also been accompanied by environmental challenges that have increased concern about the impact of these trends on the environment. Environmental welfare plays a key role in the organization of societies and drawing attention to environmental issues as one of the main dimensions of sustainability. This is also true for the development structures and decisions related to the environment. The purpose of the present study is to investigate the impact of economic globalization on environmental well-being in developed and developing countries during the years 2000 to 2020 using soft panel regression. The results show the existence of a non-linear relationship between the research variables. For developed and developing countries, a transfer function and two threshold limits, representing a two-regime model, were also chosen as the optimal model. The slope factor for developed and developing countries was equal to 1.28 and 159.78 respectively. The results of the model estimation indicate that in developed countries, the variable of economic globalization has a negative effect on environmental welfare in the first extreme regime and a positive and significant effect in the second extreme regime. In developing countries, the variable of economic globalization has also a negative and significant effect on environmental well-being in both regimes. On the other hand, in developed countries, for the first limit regime, economic globalization may lead to an increase in unsustainable use of resources and environmental pollution. But in the second extreme regime, it can promote the improvement of international cooperation in the field of environmental protection and the development of clean and green technologies. In developing countries, increased economic globalization may lead to increased industrial pressures and inappropriate use of natural resources, which causes damages to the environment and rampant pollution. Due to technical, financial, and regulatory constraints, these countries may not be able to take advantage of the benefits of globalization in a positive way for the environment and thus have a negative impact on environmental well-being. According to the research results, with the development of technology and industrial control, along with sustainable policies, it is possible to ensure the improvement of environmental well-being and strengthen the positive effect of economic globalization on environmental well-being.
Methodology
This study examines the impact of globalization on environmental well-being in developed and developing countries (133 countries) for the period 2000-2020 using the panel smooth transition regression (PSTR) model. Statistical tables, global databases, data from the Swiss Economic Institute KOF, and the Social Science Institute (SSI) - TH Köln website were used to collect statistics and quantitative information. The environmental welfare variable in this research as a dependent variable is the geometric mean of seven indicators of biodiversity, renewable water resources, energy consumption, energy efficiency, energy reserves, greenhouse gases and renewable energy. Economic globalization is considered as a transition variable, and to better explain the issues of GDP per capita growth (percentage per annum), general government final consumption expenditure (percentage of GDP), foreign direct investment, net inflows (percentage of GDP) and population growth (percentage per annum) were selected as influential factors. PSTR as a statistical model is usually used to analyze non-linear relationships between economic variables, especially to investigate non-linear patterns or changes in the behavior of variables over time. This flexible model can depict complex relationships between different variables and is known as a popular choice in various fields such as economics, finance and social science. The model is an extension of the smooth transition regression (STR) that allows the determination of the transition function between two different regimes. With PSTR, the transfer function is extended for panel data, which allows the analysis of nonlinear relationships between variables in multiple units, such as countries or firms, over time. PSTR is a powerful tool for analyzing the impact of various economic factors on different regions or countries and can be used to examine the impact of a specific economic policy or event on different regions. PSTR can also be used for different types of data such as cross-sectional, time series and panel data, which makes it a versatile tool for analyzing various economic phenomena.
Findings
The research shows the estimated results of the model upon which the slope parameter, which expresses the speed of adjustment from one regime to another, is equal to 1.28 and 159.78 for developed and developing countries, respectively, i.e, the transition from linear regime to non-linear regime in developed countries is done at a much lower speed than in developing countries. The estimation of the model shows the nonlinear relationship in two threshold points for developed countries c_1=79.5617 and c_2=85.0326 and c = (79.56+85.03)/2 = 82.29 also for developing countries c_1= 50.6518 and c_2 = 62.4416 and c = (50.65+62.44) /2 = 56.54 and the transfer function is in two regimes. If the economic globalization exceeds 82.29 in developed countries and 56.54 in developing countries, the behavior of the variables will be according to the second regime, and if it is less than the above threshold, they will be in the first regime.
In developed countries, the coefficients are such that the variable of economic globalization has a negative and significant effect on environmental welfare in the first limit regime and a positive and significant effect in the second limit regime. GDP per capita growth has a positive and non-significant effect on environmental well-being in the first limit regime and a significant negative effect in the second limit regime. Government size and population growth have also a positive effect in the first limit regime and a negative and significant effect in the second limit regime. Foreign direct investment in both regimes has a negative and insignificant effect on environmental well-being.
In developing countries, the coefficients are such that the variable of economic globalization, the growth of GDP per capita in both marginal regimes has a negative and significant effect, as well as the size of the government and population growth in both marginal regimes have a negative and insignificant effect on the dependent variable (welfare). Foreign direct investment has also a positive and insignificant effect in the first limit regime and a negative and significant effect in the second limit regime on environmental well-being.
Discussion and Conclusion
The results of the research show that the impact of various factors on environmental well-being in developed and developing countries is different from each other. These differences may be due to different economic, social, and cultural conditions in these countries.
In developed countries in the first limit regime, economic globalization leads to an increase in economic pressures and international competition, which can cause more use of natural resources, increase the production of pollutants, and decrease the quality of the environment. Moreover, in the second extreme regime, the Economic globalization variable has a positive and significant effect on environmental well-being. This may be due to increased access to advanced technologies, higher environmental standards, and increased international cooperation in environmental protection.
In developing countries, economic globalization variables have a negative effect on environmental well-being in both regimes. In other words, the increase of these variables in both limit regimes leads to a decrease in the quality of the environment and environmental well-being. In other words, economic globalization leads to an increase in the per capita production and consumption of energy and natural resources, which can lead to air and water pollution, a decrease in biodiversity, and a reduction in air and water quality.
In general, it can be concluded that in developed countries, increasing economic growth, government size, and population growth lead to improved environmental conditions, but in developing countries, these factors usually cause a decrease in environmental quality and environmental well-being. For the optimal management of environmental welfare in any country, it is necessary to pay attention to the economic, social and cultural conditions of that country. It is also vitally important to formulate appropriate policies and strategies to deal with environmental challenges
Dr Esmaiel Abounoori, Dr Anahita Roozitalab,
Volume 0, Issue 0 (12-2024)
Volume 0, Issue 0 (12-2024)
Abstract
Aim and Introduction
Inequality is a multidimensional phenomenon that affects various aspects of households' lives. The economic well-being of individuals depends not only on their income but also on other factors such as access to healthcare, education, transportation, etc. Therefore, one-dimensional methods (income-focused) are insufficient for measuring inequality. The multidimensional approach to inequality considers different aspects of individual welfare, unlike the one-dimensional approach. The concentration of population and activities in some provinces of Iran, along with macroeconomic indicators (inflation and unemployment), exacerbates inequality. These inequalities affect various dimensions of people's lives and endanger their economic welfare. The primary aim of this study is to examine the effects of inflation and unemployment on multidimensional inequality in the provinces of Iran and their reciprocal effects on each other, using a multidimensional Gini coefficient estimated from the household budget microdata of the Statistical Center of Iran for the years 2000-2021.
Methodology
In this study, the multidimensional Gini coefficient by Kumar Banerjee (2010) has been estimated for 9 dimensions of welfare. Then, the effects of inflation and unemployment, along with variables such as per capita real government expenditure and per capita real financial facilities as indicators of financial development, will be analyzed using a spatial econometric model. The mathematical form of the multidimensional Gini coefficient (MGI) is as follows:
Here, the mathematical formula would be inserted) In this equation: represents the non-increasing rank of the unit under study in the individual's overall welfare vector, and represents the sample size. The range of this index fluctuates between zero (completely equal distribution) and one (completely unequal distribution). For measuring multidimensional inequality in this study, the multidimensional Gini coefficient by Kumar Banerjee (2010) has been used which is based on the microdata from the household expenditure (income) survey of the Statistical Center of Iran and involves data mining processes such as aggregating groups of beverages and tobacco, ready meals with food expenditure groups, and communications with transportation, and extracting data related to each household code in each province using R Studio 2020 software. The model is based on the spatial econometric method with spatial panel data, defined using a proximity method in which provinces sharing a border have an element of one and otherwise zero. The adjacency matrix (spatial weight) is normalized, where neighboring provinces carry the most weight, and distant provinces carry the least.
Findings
The results of estimating the multidimensional Gini coefficient for the provinces during 2000-2021 show that most provinces have experienced a high rate of inequality. Provinces such as Bushehr, Khuzestan, Kermanshah, Kurdistan, Markazi, Qazvin, Qom, Semnan, Sistan and Baluchestan, West Azerbaijan, Zanjan, and Yazd are in an unfavorable condition compared to the country, and most of these provinces are border regions. Over these 22 years, Sistan and Baluchestan with 77.66% have the highest rate of multidimensional inequality, while Isfahan with 60.85% has the lowest among the provinces. Additionally, the findings indicate that inflation, unemployment, per capita real government expenditure, and per capita real disbursed financial facilities have a significant positive effect on multidimensional inequality in the provinces of Iran. The proximity of provinces has also worsened the inequality conditions in the neighboring provinces.
Discussion and Conclusion
Four variables including unemployment, inflation, per capita real government expenditure, and per capita real disbursed financial facilities have a significant positive effect on the multidimensional Gini coefficient, worsening income distribution. The most significant impact is seen with per capita real government expenditure, which is not allocated effectively to enhance welfare and improve economic conditions, thus not improving income distribution and reducing inequality. The effects of the other variables are in the following order: per capita real disbursed financial facilities, unemployment, and inflation. It is recommended to consider all welfare dimensions in the household consumption basket, create equal conditions for access to bank facilities, allocate a specific quota of facilities to lessdeveloped provinces, allocate government expenditures to expand public services and infrastructure in deprived provinces, consider the interactive effects between provinces in policymaking, and implement effective policies to improve welfare conditions and balanced income distribution across all provinces
Inequality is a multidimensional phenomenon that affects various aspects of households' lives. The economic well-being of individuals depends not only on their income but also on other factors such as access to healthcare, education, transportation, etc. Therefore, one-dimensional methods (income-focused) are insufficient for measuring inequality. The multidimensional approach to inequality considers different aspects of individual welfare, unlike the one-dimensional approach. The concentration of population and activities in some provinces of Iran, along with macroeconomic indicators (inflation and unemployment), exacerbates inequality. These inequalities affect various dimensions of people's lives and endanger their economic welfare. The primary aim of this study is to examine the effects of inflation and unemployment on multidimensional inequality in the provinces of Iran and their reciprocal effects on each other, using a multidimensional Gini coefficient estimated from the household budget microdata of the Statistical Center of Iran for the years 2000-2021.
Methodology
In this study, the multidimensional Gini coefficient by Kumar Banerjee (2010) has been estimated for 9 dimensions of welfare. Then, the effects of inflation and unemployment, along with variables such as per capita real government expenditure and per capita real financial facilities as indicators of financial development, will be analyzed using a spatial econometric model. The mathematical form of the multidimensional Gini coefficient (MGI) is as follows:
Here, the mathematical formula would be inserted) In this equation: represents the non-increasing rank of the unit under study in the individual's overall welfare vector, and represents the sample size. The range of this index fluctuates between zero (completely equal distribution) and one (completely unequal distribution). For measuring multidimensional inequality in this study, the multidimensional Gini coefficient by Kumar Banerjee (2010) has been used which is based on the microdata from the household expenditure (income) survey of the Statistical Center of Iran and involves data mining processes such as aggregating groups of beverages and tobacco, ready meals with food expenditure groups, and communications with transportation, and extracting data related to each household code in each province using R Studio 2020 software. The model is based on the spatial econometric method with spatial panel data, defined using a proximity method in which provinces sharing a border have an element of one and otherwise zero. The adjacency matrix (spatial weight) is normalized, where neighboring provinces carry the most weight, and distant provinces carry the least.
Findings
The results of estimating the multidimensional Gini coefficient for the provinces during 2000-2021 show that most provinces have experienced a high rate of inequality. Provinces such as Bushehr, Khuzestan, Kermanshah, Kurdistan, Markazi, Qazvin, Qom, Semnan, Sistan and Baluchestan, West Azerbaijan, Zanjan, and Yazd are in an unfavorable condition compared to the country, and most of these provinces are border regions. Over these 22 years, Sistan and Baluchestan with 77.66% have the highest rate of multidimensional inequality, while Isfahan with 60.85% has the lowest among the provinces. Additionally, the findings indicate that inflation, unemployment, per capita real government expenditure, and per capita real disbursed financial facilities have a significant positive effect on multidimensional inequality in the provinces of Iran. The proximity of provinces has also worsened the inequality conditions in the neighboring provinces.
Discussion and Conclusion
Four variables including unemployment, inflation, per capita real government expenditure, and per capita real disbursed financial facilities have a significant positive effect on the multidimensional Gini coefficient, worsening income distribution. The most significant impact is seen with per capita real government expenditure, which is not allocated effectively to enhance welfare and improve economic conditions, thus not improving income distribution and reducing inequality. The effects of the other variables are in the following order: per capita real disbursed financial facilities, unemployment, and inflation. It is recommended to consider all welfare dimensions in the household consumption basket, create equal conditions for access to bank facilities, allocate a specific quota of facilities to lessdeveloped provinces, allocate government expenditures to expand public services and infrastructure in deprived provinces, consider the interactive effects between provinces in policymaking, and implement effective policies to improve welfare conditions and balanced income distribution across all provinces
Dr Ali Raispour, Dr Mohsen Zayanderoodi, Mr Mohammad Reza Safavi Gerdini,
Volume 0, Issue 0 (12-2024)
Volume 0, Issue 0 (12-2024)
Abstract
Aim and Introduction
In most world economies, governments have been proposed as a complementary institution and are bound to interfere in the economy. The degree of government involvement in any economy depends on the political and economic system in that country. One of the government's intervention tools is subsidy payments considered as financial aids aiming at transferring government resources to buyers and sellers. Therefore, one of the most well-known ways of transferring income to vulnerable groups is subsidy payment. This tool has a long history in different economies. In general, subsidies can be divided into four categories: a) based on the government's goals, which include economic subsidies, development subsidies, social subsidies, political subsidies, and cultural subsidies; b) Based on the stages of the goods, which include consumption subsidies, production subsidies, distribution subsidies, service subsidies, export subsidies, and import reduction subsidies and currency savings; c) Based on the classification of the subsidy itself, which includes direct subsidy and indirect subsidy; and d) based on the reflection of its costs, which includes hidden subsidies and open subsidies. Also, regarding the methods of applying subsidies, it should be noted that subsidies in the consumption sector are mainly paid in cash, goods, general prices and coupons. On the other hand, the payment of subsidy will disrupt the price system and lead to deviation in production and investment.
Since governments dependent heavily on oil revenues usually seek to pay subsidies in general, they normally encounter many problems including waste of resources, increase in consumption, smuggling, lack of efficient allocation of resources and reduction of efficiency in the economy. This happens because the price of subsidized goods is not realistic. For this purpose, Iran and other developing economies are seeking to apply the policy of targeting subsidies. One of the results of policies targeting subsidies is the realization of prices, which will improve the performance of producers and choose an optimal production process.
Since targeting subsidies has significant effects on the relative advantage of manufactured goods and subsequent sustainable growth and development, therefore, it is crucially important and essential to investigate the effects of this policy on the business model.
A review of the experimental studies conducted inside the country indicates that the effect of reducing (eliminating) the subsidy of basic goods (Sections 25-22 in the software package of the Global Trade Analysis Project) on the trade pattern has not been investigated so far.
In this regard, the aim of the current research is to investigate the effects of reducing (eliminating) subsidies for basic goods (sections 22-25 in the software package of the Global Trade Analysis Project) on Iran's trade using the GTAP model.
Methodology
The Global Trade Analysis Project model is one of the types of Computable General Equilibrium (CGE) models, the software related to it (GEMPACK, RunGTAP) and the database are provided to the researchers by its designers.
In the current research, the data has been gathered in the form of four sectors (dairy, rice, sugar and other foods) and two regions (Iran and other parts of the world) and the analysis has been done in two scenarios which are designed as follows:
1) 50% reduction in the subsidy paid to the firm's consumption-domestic goods.
2) 100% reduction in the subsidy paid to the firm's consumption-domestic goods.
Findings
The results showed that in both scenarios, the economic welfare of Iran and the rest of the world decreased and increased, respectively, and the intensity of these changes is greater in the second scenario (removal of basic commodity subsidies). The share of resource allocation efficiency and term of trade and savings-investment relationship in reducing economic welfare is higher in the second scenario. The highest decrease in economic welfare in the first and second scenario is related to sector 25 and the lowest decrease in economic well-being in both scenarios is related to sector 22.
Reducing the subsidy paid on the firm's consumption-domestic goods in these sectors will increase the export of these goods. The most positive changes in Iran's trade balance in the first scenario (50% reduction in subsidies) are related to sector 25 and equal to 48.4 million dollars, and the most negative trade balance of Iran in the second scenario (complete elimination of subsidies) is related to sector 25 and equal to 7.96 has been negative. In total, the reduction of subsidies for basic goods simultaneously in all 4 sectors has led to positive changes in Iran's trade balance.
Discussion and Conclusion
According to the economic results of this research, it is recommended to gradually remove the subsidy paid to the firm's consumption domestic goods so that, while having a positive effect on the changes in Iran's trade balance, the economic welfare does not face a large and one-time decline
In most world economies, governments have been proposed as a complementary institution and are bound to interfere in the economy. The degree of government involvement in any economy depends on the political and economic system in that country. One of the government's intervention tools is subsidy payments considered as financial aids aiming at transferring government resources to buyers and sellers. Therefore, one of the most well-known ways of transferring income to vulnerable groups is subsidy payment. This tool has a long history in different economies. In general, subsidies can be divided into four categories: a) based on the government's goals, which include economic subsidies, development subsidies, social subsidies, political subsidies, and cultural subsidies; b) Based on the stages of the goods, which include consumption subsidies, production subsidies, distribution subsidies, service subsidies, export subsidies, and import reduction subsidies and currency savings; c) Based on the classification of the subsidy itself, which includes direct subsidy and indirect subsidy; and d) based on the reflection of its costs, which includes hidden subsidies and open subsidies. Also, regarding the methods of applying subsidies, it should be noted that subsidies in the consumption sector are mainly paid in cash, goods, general prices and coupons. On the other hand, the payment of subsidy will disrupt the price system and lead to deviation in production and investment.
Since governments dependent heavily on oil revenues usually seek to pay subsidies in general, they normally encounter many problems including waste of resources, increase in consumption, smuggling, lack of efficient allocation of resources and reduction of efficiency in the economy. This happens because the price of subsidized goods is not realistic. For this purpose, Iran and other developing economies are seeking to apply the policy of targeting subsidies. One of the results of policies targeting subsidies is the realization of prices, which will improve the performance of producers and choose an optimal production process.
Since targeting subsidies has significant effects on the relative advantage of manufactured goods and subsequent sustainable growth and development, therefore, it is crucially important and essential to investigate the effects of this policy on the business model.
A review of the experimental studies conducted inside the country indicates that the effect of reducing (eliminating) the subsidy of basic goods (Sections 25-22 in the software package of the Global Trade Analysis Project) on the trade pattern has not been investigated so far.
In this regard, the aim of the current research is to investigate the effects of reducing (eliminating) subsidies for basic goods (sections 22-25 in the software package of the Global Trade Analysis Project) on Iran's trade using the GTAP model.
Methodology
The Global Trade Analysis Project model is one of the types of Computable General Equilibrium (CGE) models, the software related to it (GEMPACK, RunGTAP) and the database are provided to the researchers by its designers.
In the current research, the data has been gathered in the form of four sectors (dairy, rice, sugar and other foods) and two regions (Iran and other parts of the world) and the analysis has been done in two scenarios which are designed as follows:
1) 50% reduction in the subsidy paid to the firm's consumption-domestic goods.
2) 100% reduction in the subsidy paid to the firm's consumption-domestic goods.
Findings
The results showed that in both scenarios, the economic welfare of Iran and the rest of the world decreased and increased, respectively, and the intensity of these changes is greater in the second scenario (removal of basic commodity subsidies). The share of resource allocation efficiency and term of trade and savings-investment relationship in reducing economic welfare is higher in the second scenario. The highest decrease in economic welfare in the first and second scenario is related to sector 25 and the lowest decrease in economic well-being in both scenarios is related to sector 22.
Reducing the subsidy paid on the firm's consumption-domestic goods in these sectors will increase the export of these goods. The most positive changes in Iran's trade balance in the first scenario (50% reduction in subsidies) are related to sector 25 and equal to 48.4 million dollars, and the most negative trade balance of Iran in the second scenario (complete elimination of subsidies) is related to sector 25 and equal to 7.96 has been negative. In total, the reduction of subsidies for basic goods simultaneously in all 4 sectors has led to positive changes in Iran's trade balance.
Discussion and Conclusion
According to the economic results of this research, it is recommended to gradually remove the subsidy paid to the firm's consumption domestic goods so that, while having a positive effect on the changes in Iran's trade balance, the economic welfare does not face a large and one-time decline
Dr Abolghasem Golkhandan,
Volume 0, Issue 0 (12-2024)
Volume 0, Issue 0 (12-2024)
Abstract
Aim and Introduction
Ecological footprint accounting is composed of two metrics, the “demand-side” (ecological footprint) and the “supply-side” (biocapacity). While the ecological footprint calculates the demand for natural assets in global hectares, biocapacity symbolizes the supply capacity of nature to meet this demand with the same unit of measurement. Ecological deficit also shows the difference between ecological footprint and biological capacity. Globally, the degree of ecological deficits continued to expand over the last decade due to the increase in EF and reduction in biocapacity, which is caused by the following: increasing consumption of fossil fuel energy, overexploitation of natural resources, unsustainable production methods, and economic activities.
Iran is one of the countries that has a weak environmental performance. According to the Global Footprint Network, Iran's ecological footprint exceeded 333% of its biological capacity in 2022. Iran's ecological deficit, which was - 0.55 global per capita hectares in 1961, has increased by 554% to 2.50 global per capita hectares in 2022, and the destruction and pollution of the environment in Iran have reached unsustainable levels. Therefore, the analysis of the determinants of environmental quality can provide insights into the design of appropriate environmental policies in Iran.
In this regard, the environmental effects of dependence on crude oil have attracted considerable attention. Crude oil is an important and largest source of energy, especially for developing countries such as Iran. It is a fossil-based fuel and a major source of carbon emissions in the world. Hence, many studies have linked oil price shocks to environment quality. In contrast to oil-importing economies, where oil price increases encourage a shift to cheaper and cleaner alternative energy sources, the environmental policy issue in oil-exporting countries is entirely different. Indeed, a fall in oil prices may be associated with a decreased investment in environmentally friendly energy sources. By comparison, an increase in oil prices revealed a reluctance to diversify the economy away from its reliance on non-eco-friendly fossil fuel energy.
Based on the explanations above, the main purpose of this article is to investigate the asymmetric impact of scaled oil price impulses on the environmental Load Capacity Factor (LCF) in Iran using the Non-linear Autoregressive Distributed Lag (MATNARDL) approach. The paper intends to make the following contributions to the literature. Firstly, this article is the first to look into the effect of oil prices on the LCF in Iran by applying asymmetric methodologies. Secondly, it is the first study with a reverse load capacity factor as an environmental sustainability indicator. Thirdly, this paper applied the advanced and newly developed MATNARDL for asymmetric and nonlinear analysis to provide a more robust result that exhibits relevant policy implications. Finally, this innovative study investigated the effects of oil prices on the LCF in Iran between 1961 and 2022 in the framework of the LCC hypothesis.
Methodology
The study compiles annual data for the period 1961-2022 for Iran from three different sources. According to Statista, OP represents average annual OPEC crude oil price (in US dollars per barrel). The data are obtained from the World Bank, GDP per capita, (constant 2015 dollars), Energy Consumption (EC) as kg of oil equivalent per capita, Ecological Footprint (per capita, gha) and LCF (the load capacity factor) are obtained from Global Footprint Network. Because the LCF includes biocapacity in the numerator and EF in the denominator, it allows for simultaneous environmental assessment on the supply and demand sides. A higher LCF indicates a better environment. The current paper's economic functions are illustrated in Equations (1):
2
The main objective of this study is to examine the major, medium and minimal scales of positive and negative changes in oil price on the environmental quality index in Iran. For this purpose, the MATNARDL is used as an estimator to examine the effect of minor to major adverse shocks and minor to major positive surprises in the explanatory variable on the explained variable.
Findings
The bounds cointegration test results confirm a long-term relationship in the asymmetric model. The estimation of the model has been performed by categorizing the positive and negative impulses of the oil price in three small (quantiles less than the τ30 threshold), medium (quantiles between the τ30 and τ70 thresholds), and large (quantiles greater than the τ70 threshold) scales in the form of MATNARDL approach. The results indicate that in the long term, small scale of positive (negative) oil price impulses had a positive (negative) and significant effect on the load capacity factor; while these impulses have a negative effect on the load capacity factor in the long term in both medium and large scales. Based on other results, energy consumption has a negative and significant effect on the load capacity coefficient, and the environmental hypothesis of the load capacity curve (LLC) in Iran is confirmed.
Discussion and Conclusion
Based on the obtained results, it can be said that the effect of oil price on the load capacity factor in Iran is asymmetric. Among positive impulses, only with increase in small scale of oil price, we can see an increase in load capacity factor and environmental sustainability in the country. Moreover, the positive impulses of the oil price on both medium and large scales lead to the increase of environmental instability by prioritizing economic achievements and activities over environmental issues
Ecological footprint accounting is composed of two metrics, the “demand-side” (ecological footprint) and the “supply-side” (biocapacity). While the ecological footprint calculates the demand for natural assets in global hectares, biocapacity symbolizes the supply capacity of nature to meet this demand with the same unit of measurement. Ecological deficit also shows the difference between ecological footprint and biological capacity. Globally, the degree of ecological deficits continued to expand over the last decade due to the increase in EF and reduction in biocapacity, which is caused by the following: increasing consumption of fossil fuel energy, overexploitation of natural resources, unsustainable production methods, and economic activities.
Iran is one of the countries that has a weak environmental performance. According to the Global Footprint Network, Iran's ecological footprint exceeded 333% of its biological capacity in 2022. Iran's ecological deficit, which was - 0.55 global per capita hectares in 1961, has increased by 554% to 2.50 global per capita hectares in 2022, and the destruction and pollution of the environment in Iran have reached unsustainable levels. Therefore, the analysis of the determinants of environmental quality can provide insights into the design of appropriate environmental policies in Iran.
In this regard, the environmental effects of dependence on crude oil have attracted considerable attention. Crude oil is an important and largest source of energy, especially for developing countries such as Iran. It is a fossil-based fuel and a major source of carbon emissions in the world. Hence, many studies have linked oil price shocks to environment quality. In contrast to oil-importing economies, where oil price increases encourage a shift to cheaper and cleaner alternative energy sources, the environmental policy issue in oil-exporting countries is entirely different. Indeed, a fall in oil prices may be associated with a decreased investment in environmentally friendly energy sources. By comparison, an increase in oil prices revealed a reluctance to diversify the economy away from its reliance on non-eco-friendly fossil fuel energy.
Based on the explanations above, the main purpose of this article is to investigate the asymmetric impact of scaled oil price impulses on the environmental Load Capacity Factor (LCF) in Iran using the Non-linear Autoregressive Distributed Lag (MATNARDL) approach. The paper intends to make the following contributions to the literature. Firstly, this article is the first to look into the effect of oil prices on the LCF in Iran by applying asymmetric methodologies. Secondly, it is the first study with a reverse load capacity factor as an environmental sustainability indicator. Thirdly, this paper applied the advanced and newly developed MATNARDL for asymmetric and nonlinear analysis to provide a more robust result that exhibits relevant policy implications. Finally, this innovative study investigated the effects of oil prices on the LCF in Iran between 1961 and 2022 in the framework of the LCC hypothesis.
Methodology
The study compiles annual data for the period 1961-2022 for Iran from three different sources. According to Statista, OP represents average annual OPEC crude oil price (in US dollars per barrel). The data are obtained from the World Bank, GDP per capita, (constant 2015 dollars), Energy Consumption (EC) as kg of oil equivalent per capita, Ecological Footprint (per capita, gha) and LCF (the load capacity factor) are obtained from Global Footprint Network. Because the LCF includes biocapacity in the numerator and EF in the denominator, it allows for simultaneous environmental assessment on the supply and demand sides. A higher LCF indicates a better environment. The current paper's economic functions are illustrated in Equations (1):
The main objective of this study is to examine the major, medium and minimal scales of positive and negative changes in oil price on the environmental quality index in Iran. For this purpose, the MATNARDL is used as an estimator to examine the effect of minor to major adverse shocks and minor to major positive surprises in the explanatory variable on the explained variable.
Findings
The bounds cointegration test results confirm a long-term relationship in the asymmetric model. The estimation of the model has been performed by categorizing the positive and negative impulses of the oil price in three small (quantiles less than the τ30 threshold), medium (quantiles between the τ30 and τ70 thresholds), and large (quantiles greater than the τ70 threshold) scales in the form of MATNARDL approach. The results indicate that in the long term, small scale of positive (negative) oil price impulses had a positive (negative) and significant effect on the load capacity factor; while these impulses have a negative effect on the load capacity factor in the long term in both medium and large scales. Based on other results, energy consumption has a negative and significant effect on the load capacity coefficient, and the environmental hypothesis of the load capacity curve (LLC) in Iran is confirmed.
Discussion and Conclusion
Based on the obtained results, it can be said that the effect of oil price on the load capacity factor in Iran is asymmetric. Among positive impulses, only with increase in small scale of oil price, we can see an increase in load capacity factor and environmental sustainability in the country. Moreover, the positive impulses of the oil price on both medium and large scales lead to the increase of environmental instability by prioritizing economic achievements and activities over environmental issues
Mr Hossein Aghilifar, Dr Khosrow Piraei, Dr Hashem Zare, Dr Mehrzad Ebrahimi,
Volume 0, Issue 0 (12-2024)
Volume 0, Issue 0 (12-2024)
Abstract
Aim and Introduction
After the global economic recession in 2008-2009, the discussion about countercyclical and procyclical fiscal policies and their effects on the economy began. Countercyclical fiscal policy is applied to reduce economic fluctuations by adjusting government spending and taxes against the business cycle. The aim of this policy is to stabilize the economy and flatten its fluctuations. On the contrary, procyclical fiscal policy strengthens economic fluctuations in the direction of business cycles. On the other hand, fiscal sustainability refers to the government's ability to maintain expenditures, income and public debt at a certain level in the long term without jeopardizing economic stability or facing a fiscal crisis. A sustainable fiscal policy ensures that the government's debt in the long run is at a level proportional to the size of the economy. The main questions of this research are as follows:
After the global economic recession in 2008-2009, the discussion about countercyclical and procyclical fiscal policies and their effects on the economy began. Countercyclical fiscal policy is applied to reduce economic fluctuations by adjusting government spending and taxes against the business cycle. The aim of this policy is to stabilize the economy and flatten its fluctuations. On the contrary, procyclical fiscal policy strengthens economic fluctuations in the direction of business cycles. On the other hand, fiscal sustainability refers to the government's ability to maintain expenditures, income and public debt at a certain level in the long term without jeopardizing economic stability or facing a fiscal crisis. A sustainable fiscal policy ensures that the government's debt in the long run is at a level proportional to the size of the economy. The main questions of this research are as follows:
- Is Iran's fiscal policy countercyclical or procyclical?
- Is Iran's fiscal policy sustainable?
- What is the effect of cyclical fiscal policy and fiscal sustainability on the Iranian economic growth?
- How is the mutual relationship between fiscal sustainability and cyclical fiscal policy in Iran?
Methodology
The evaluation of fiscal policy cyclicality and fiscal sustainability and their determinants have been previously researched. However, the effect of cyclical fiscal policy and fiscal sustainability on economic growth and their mutual relationship has not been covered. This research, has utilized Iran's 1970-2021 annual data and a state-space model with time-varying parameters and an autoregressive distributed lags model as well as Kalman filter method. Moreover, to evaluate Iran's cyclical fiscal policy and fiscal sustainability, the effect of cyclical fiscal policy and fiscal sustainability on economic growth have been investigated. The research also deals with the mutual effect between cyclical fiscal policy and fiscal sustainability in Iran.
Findings
In this research, in order to evaluate the cyclical behavior of Iran's fiscal policy and obtaining the index, a state-space model with time-varying parameters, is estimated in which the real GDP logarithm coefficient varies over time. Then, in order to assess Iran's fiscal sustainability and obtaining the index, a state-space model with time-varying parameters is estimated. Finally, an autoregressive distributed lags model is utilized to estimate the effect of cyclical fiscal policy index and fiscal sustainability index on economic growth, as well as estimating the mutual effect between cyclical fiscal policy index and fiscal sustainability index.
Discussion and Conclusion
The findings of this research show: First, Iran's cyclical fiscal policy index estimated in all years is positive and has not recorded a negative number in any year, which means that the fiscal policy implemented in Iran during the period 1970-2021, was procyclical. In other words, the fiscal policy implemented in Iran has increased the range of fluctuations of cycles and for this reason, it has made the Iranian economy vulnerable to the economic shocks. Second, the estimated Iran's fiscal sustainability index is negative in most years so that the average fiscal sustainability index in the entire period is -0.068. This indicates the unsustainability of Iran's fiscal policy in the period 1970-2021. The trend of the smoothed changes of the time-varying parameter related to the fiscal sustainability index is also downward, which means that Iran's fiscal sustainability has been weakening over time and has moved in the direction of unsustainability. Third, Iran's cyclical fiscal policy index has had a negative effect on economic growth. In other words, procyclical behavior of Iran's fiscal policy has slowed down the economic growth rate. Fourth, Iran's fiscal sustainability index has a negative and significant effect on economic growth. Based on the estimated fiscal sustainability index, unsustainability is evident within Iran's fiscal policy. Therefore, unsustainability of Iran's fiscal policy has weakened economic growth. Fifth, Iran's fiscal unsustainability has increased the procyclical behavior of fiscal policy and as a result, exacerbated the fluctuations of economic cycles. Sixth, the increasing Iran's cyclical fiscal policy index reduces the reaction of the primary balance to the government debt. In other words, the increase in the procyclical behavior of the fiscal policy weakens Iran's fiscal sustainability
The evaluation of fiscal policy cyclicality and fiscal sustainability and their determinants have been previously researched. However, the effect of cyclical fiscal policy and fiscal sustainability on economic growth and their mutual relationship has not been covered. This research, has utilized Iran's 1970-2021 annual data and a state-space model with time-varying parameters and an autoregressive distributed lags model as well as Kalman filter method. Moreover, to evaluate Iran's cyclical fiscal policy and fiscal sustainability, the effect of cyclical fiscal policy and fiscal sustainability on economic growth have been investigated. The research also deals with the mutual effect between cyclical fiscal policy and fiscal sustainability in Iran.
Findings
In this research, in order to evaluate the cyclical behavior of Iran's fiscal policy and obtaining the index, a state-space model with time-varying parameters, is estimated in which the real GDP logarithm coefficient varies over time. Then, in order to assess Iran's fiscal sustainability and obtaining the index, a state-space model with time-varying parameters is estimated. Finally, an autoregressive distributed lags model is utilized to estimate the effect of cyclical fiscal policy index and fiscal sustainability index on economic growth, as well as estimating the mutual effect between cyclical fiscal policy index and fiscal sustainability index.
Discussion and Conclusion
The findings of this research show: First, Iran's cyclical fiscal policy index estimated in all years is positive and has not recorded a negative number in any year, which means that the fiscal policy implemented in Iran during the period 1970-2021, was procyclical. In other words, the fiscal policy implemented in Iran has increased the range of fluctuations of cycles and for this reason, it has made the Iranian economy vulnerable to the economic shocks. Second, the estimated Iran's fiscal sustainability index is negative in most years so that the average fiscal sustainability index in the entire period is -0.068. This indicates the unsustainability of Iran's fiscal policy in the period 1970-2021. The trend of the smoothed changes of the time-varying parameter related to the fiscal sustainability index is also downward, which means that Iran's fiscal sustainability has been weakening over time and has moved in the direction of unsustainability. Third, Iran's cyclical fiscal policy index has had a negative effect on economic growth. In other words, procyclical behavior of Iran's fiscal policy has slowed down the economic growth rate. Fourth, Iran's fiscal sustainability index has a negative and significant effect on economic growth. Based on the estimated fiscal sustainability index, unsustainability is evident within Iran's fiscal policy. Therefore, unsustainability of Iran's fiscal policy has weakened economic growth. Fifth, Iran's fiscal unsustainability has increased the procyclical behavior of fiscal policy and as a result, exacerbated the fluctuations of economic cycles. Sixth, the increasing Iran's cyclical fiscal policy index reduces the reaction of the primary balance to the government debt. In other words, the increase in the procyclical behavior of the fiscal policy weakens Iran's fiscal sustainability
Mr Firas Sabah Alivi, Dr Sara Ghobadi, Dr Saad Makassees, Dr Hossein Sharifi Renani,
Volume 0, Issue 0 (12-2024)
Volume 0, Issue 0 (12-2024)
Abstract
Aim and Introduction:
Vulnerable employment, a segment of the informal economy, includes home-based businesses that emerge due to a lack of opportunities for formal employment. These businesses often operate without essential benefits such as medical insurance, social security, bonuses, and pensions, which exposes workers to economic instability. Consequently, many individuals engaged in vulnerable employment seek loans and financial assistance to expand their business activities and transition to the formal sector. Banks, as the primary providers of such loans, request collateral from borrowers – typically in the form of property documents – to ensure repayment and mitigate financial risk. Strengthening legal rights related to loan collateral enhances banks’ confidence in issuing loans, thereby increasing access to credit for vulnerable workers.
Due to the oil-dependent nature of OPEC economies and their reliance on oil revenues, many of these countries often lack robust production infrastructures capable of generating sufficient formal employment opportunities. This study aims to analyze the effect of strengthening loan-related legal rights on vulnerable employment in OPEC member countries, including Iran, Iraq, Algeria, Angola, Congo, Gabon, Kuwait, Saudi Arabia, the United Arab Emirates, Venezuela, Guinea, Libya, and Nigeria, during the period from 2013 to 2021.
Methodology:
Following the approach of Herkenhoff et al. (2021), this study employs a model in which the independent variables include the strength of legal rights related to loans, oil revenues, secondary school enrollment rates, and the urbanization ratio. Given the study’s objective of analyzing the threshold effects of legal loan rights on vulnerable employment, the Panel Smooth Transition Regression (PSTRmouseout="msoCommentHide('_com_1')" onmouseover="msoCommentShow('_anchor_1','_com_1')">[A1] ) method is used to estimate the model.
Results and Discussion:
The analysis identifies a 6.22% threshold in the legal rights index, distinguishing two distinct regimes. In the first regime, the strength of legal loan rights does not significantly impact vulnerable employment. However, in the second regime, a higher index value reduces vulnerable employment, suggesting that more substantial legal loan rights facilitate the transition of workers from the vulnerable to the formal sector. Additionally, oil revenues and secondary school enrollment rates exhibit a negative effect on vulnerable employment, while the urbanization ratio has a positive effect.
Conclusion:
The findings of this study indicate that strengthening legal loan rights has contributed to a reduction in vulnerable employment, which is a subset of informal employment. This shift has contributed to growth in formal sector employment. Banking regulations and enhanced requirements for obtaining collateral have increased banks’ confidence in lending, as they are better able to mitigate the risk of non-repayment. However, this system primarily benefits individuals who can pledge valid collateral, such as real estate and housing documents. Given the high value of such collateralized assets, borrowers are more likely to invest their loans in business development, transitioning their employment from the informal to the formal sector. In addition to securing stable employment, they also gain access to social benefits such as insurance and social security. This financial stability enables them to make timely loan repayments, preventing defaults and preserving their financial credibility.
Based on these findings, it is recommended that governments and banking authorities in the investigated countries implement strict laws and regulations to guarantee loan security and identify factors contributing to bank insolvency. Such measures would help prevent financial resource mismanagement in the banking sector and reduce the probability of bank failures. Strengthening financial regulations and risk management strategies would facilitate lending, ultimately promoting employment growth in the formal sector and reducing the prevalence of vulnerable employment.
Furthermore, the study reveals that oil revenues negatively impact vulnerable employment, which may be attributed to increased government spending on productive investments and formal job creation. This suggests that redirecting oil revenues toward investment, production, and employment generation—rather than short-term expenditures—can facilitate the transition of workers from the informal to the formal sector. Thus, policymakers are encouraged to prioritize long-term economic strategies that allocate oil revenues to sectors that foster sustainable employment opportunities.
The findings also highlight the positive effect of education on labor force transition. Higher levels of education and training result in a more skilled workforce, increasing their acceptance and employability in formal job markets. Therefore, governments should allocate additional resources to public education, provide free schooling, and expand access to higher education for economically disadvantaged groups. Promoting scientific education and fostering a culture that values learning can further enhance workforce skills and economic mobility.
Finally, the study finds that urbanization has had a positive effect on vulnerable employment, indicating that increasing urbanization has not been accompanied by industrial advancements or skill development, thereby failing to support the expansion of the formal sector. Instead, urbanization in the studied countries has often been driven by unfavorable business environments, weak regulatory frameworks, and a lack of political transparency, contributing to the growth of the informal economy. To address these challenges, policymakers should focus on improving governance, strengthening legal and economic structures, and fostering a business-friendly environment that supports formal employment
Vulnerable employment, a segment of the informal economy, includes home-based businesses that emerge due to a lack of opportunities for formal employment. These businesses often operate without essential benefits such as medical insurance, social security, bonuses, and pensions, which exposes workers to economic instability. Consequently, many individuals engaged in vulnerable employment seek loans and financial assistance to expand their business activities and transition to the formal sector. Banks, as the primary providers of such loans, request collateral from borrowers – typically in the form of property documents – to ensure repayment and mitigate financial risk. Strengthening legal rights related to loan collateral enhances banks’ confidence in issuing loans, thereby increasing access to credit for vulnerable workers.
Due to the oil-dependent nature of OPEC economies and their reliance on oil revenues, many of these countries often lack robust production infrastructures capable of generating sufficient formal employment opportunities. This study aims to analyze the effect of strengthening loan-related legal rights on vulnerable employment in OPEC member countries, including Iran, Iraq, Algeria, Angola, Congo, Gabon, Kuwait, Saudi Arabia, the United Arab Emirates, Venezuela, Guinea, Libya, and Nigeria, during the period from 2013 to 2021.
Methodology:
Following the approach of Herkenhoff et al. (2021), this study employs a model in which the independent variables include the strength of legal rights related to loans, oil revenues, secondary school enrollment rates, and the urbanization ratio. Given the study’s objective of analyzing the threshold effects of legal loan rights on vulnerable employment, the Panel Smooth Transition Regression (PSTRmouseout="msoCommentHide('_com_1')" on
Results and Discussion:
The analysis identifies a 6.22% threshold in the legal rights index, distinguishing two distinct regimes. In the first regime, the strength of legal loan rights does not significantly impact vulnerable employment. However, in the second regime, a higher index value reduces vulnerable employment, suggesting that more substantial legal loan rights facilitate the transition of workers from the vulnerable to the formal sector. Additionally, oil revenues and secondary school enrollment rates exhibit a negative effect on vulnerable employment, while the urbanization ratio has a positive effect.
Conclusion:
The findings of this study indicate that strengthening legal loan rights has contributed to a reduction in vulnerable employment, which is a subset of informal employment. This shift has contributed to growth in formal sector employment. Banking regulations and enhanced requirements for obtaining collateral have increased banks’ confidence in lending, as they are better able to mitigate the risk of non-repayment. However, this system primarily benefits individuals who can pledge valid collateral, such as real estate and housing documents. Given the high value of such collateralized assets, borrowers are more likely to invest their loans in business development, transitioning their employment from the informal to the formal sector. In addition to securing stable employment, they also gain access to social benefits such as insurance and social security. This financial stability enables them to make timely loan repayments, preventing defaults and preserving their financial credibility.
Based on these findings, it is recommended that governments and banking authorities in the investigated countries implement strict laws and regulations to guarantee loan security and identify factors contributing to bank insolvency. Such measures would help prevent financial resource mismanagement in the banking sector and reduce the probability of bank failures. Strengthening financial regulations and risk management strategies would facilitate lending, ultimately promoting employment growth in the formal sector and reducing the prevalence of vulnerable employment.
Furthermore, the study reveals that oil revenues negatively impact vulnerable employment, which may be attributed to increased government spending on productive investments and formal job creation. This suggests that redirecting oil revenues toward investment, production, and employment generation—rather than short-term expenditures—can facilitate the transition of workers from the informal to the formal sector. Thus, policymakers are encouraged to prioritize long-term economic strategies that allocate oil revenues to sectors that foster sustainable employment opportunities.
The findings also highlight the positive effect of education on labor force transition. Higher levels of education and training result in a more skilled workforce, increasing their acceptance and employability in formal job markets. Therefore, governments should allocate additional resources to public education, provide free schooling, and expand access to higher education for economically disadvantaged groups. Promoting scientific education and fostering a culture that values learning can further enhance workforce skills and economic mobility.
Finally, the study finds that urbanization has had a positive effect on vulnerable employment, indicating that increasing urbanization has not been accompanied by industrial advancements or skill development, thereby failing to support the expansion of the formal sector. Instead, urbanization in the studied countries has often been driven by unfavorable business environments, weak regulatory frameworks, and a lack of political transparency, contributing to the growth of the informal economy. To address these challenges, policymakers should focus on improving governance, strengthening legal and economic structures, and fostering a business-friendly environment that supports formal employment
mouseout="msoCommentHide('_com_1')" onmouseover="msoCommentShow('_anchor_1','_com_1')" style="text-align: justify;">
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mouseout="msoCommentHide('_com_1')" onmouseover="msoCommentShow('_anchor_1','_com_1')" style="text-align: justify;"> [A1]The written abbreviation is for “the Panel Smooth Transition Regression”
Mrs Fatemeh Etemadmoghadam, Dr Majid Sameti, Dr Sara Ghobadi, Dr Mansour Mahinizadeh,
Volume 0, Issue 0 (12-2024)
Volume 0, Issue 0 (12-2024)
Abstract
Aim and Introduction
There are many models and tools to communicate with the international economy and use its capacity to exploit for the benefit of the domestic economy. One of these famous models is the establishment of free zones and attracting international capital through these areas. According to the definition in the Kyoto Convention, a free economic zone is a part of the mainland where the exchange of goods is considered beyond the existing restrictions in the mainland and is not bound by the customs and tax laws of the mainland. Free zones have different economic regulations from other parts of the mainland. The differences can provide the basis for attracting capital, commercial prosperity, and economic growth. To grow and develop these areas, countries use various incentives such as legal, tax, customs, and financial incentives.
Methodology
The term general equilibrium in this method means that all the markets included in this structure must be in balance. In other words, the market settlement condition must be established. This means that in the general equilibrium model, all variables are assumed to be endogenous and non-constant, and this is contrary to the partial equilibrium structure, where the variables of other markets are assumed to be constant. This research analyzes the impact of customs exemption on imported goods in free zones in the form of the DSGE method with a neoclassical pproach. All the relationships necessary to explain the effectiveness of this incentive according to the theoretical foundations, the selected goals of the establishment of regions in Iran and their performance have been stated, and other relationships in other economic sectors have been considered to complete the model. The parameters of the model are also estimated according to the calibration method and using calculation software and econometric estimation. The performance of the model is evaluated by comparing the widths obtained from the simulation of the model and the torques of the real data. Finally, the simulation of the model can be seen by applying impulses.
Findings
In this study, the simulation of customs duty exemption impulses in free zones shows that applying impulses to increase import exemptions to free zones, leads to an increase in foreign direct investment, an increase in capital accumulation, an increase in exports of free zones, and finally, an increase in employment. As the export in free zones increases, the export of products from the mainland decreases.
Discussion and Conclusion
The results of applying the impulse effect of reducing import tariffs in free zones indicate that the intensity of the increase in the exemption of import tariffs for goods to free zones leads to an increase in foreign direct investment, an increase in the amount of investment, an increase in capital accumulation, an increase in the export of free zones and finally, the increased employment rate. In terms of export and domestic production, with the application of tariff reduction, imports in free zones will increase and exports from the mainland will decrease, and due to the weight of exports from the mainland compared to free zones, the total exports of the country will decrease
There are many models and tools to communicate with the international economy and use its capacity to exploit for the benefit of the domestic economy. One of these famous models is the establishment of free zones and attracting international capital through these areas. According to the definition in the Kyoto Convention, a free economic zone is a part of the mainland where the exchange of goods is considered beyond the existing restrictions in the mainland and is not bound by the customs and tax laws of the mainland. Free zones have different economic regulations from other parts of the mainland. The differences can provide the basis for attracting capital, commercial prosperity, and economic growth. To grow and develop these areas, countries use various incentives such as legal, tax, customs, and financial incentives.
Methodology
The term general equilibrium in this method means that all the markets included in this structure must be in balance. In other words, the market settlement condition must be established. This means that in the general equilibrium model, all variables are assumed to be endogenous and non-constant, and this is contrary to the partial equilibrium structure, where the variables of other markets are assumed to be constant. This research analyzes the impact of customs exemption on imported goods in free zones in the form of the DSGE method with a neoclassical pproach. All the relationships necessary to explain the effectiveness of this incentive according to the theoretical foundations, the selected goals of the establishment of regions in Iran and their performance have been stated, and other relationships in other economic sectors have been considered to complete the model. The parameters of the model are also estimated according to the calibration method and using calculation software and econometric estimation. The performance of the model is evaluated by comparing the widths obtained from the simulation of the model and the torques of the real data. Finally, the simulation of the model can be seen by applying impulses.
Findings
In this study, the simulation of customs duty exemption impulses in free zones shows that applying impulses to increase import exemptions to free zones, leads to an increase in foreign direct investment, an increase in capital accumulation, an increase in exports of free zones, and finally, an increase in employment. As the export in free zones increases, the export of products from the mainland decreases.
Discussion and Conclusion
The results of applying the impulse effect of reducing import tariffs in free zones indicate that the intensity of the increase in the exemption of import tariffs for goods to free zones leads to an increase in foreign direct investment, an increase in the amount of investment, an increase in capital accumulation, an increase in the export of free zones and finally, the increased employment rate. In terms of export and domestic production, with the application of tariff reduction, imports in free zones will increase and exports from the mainland will decrease, and due to the weight of exports from the mainland compared to free zones, the total exports of the country will decrease
Volume 0, Issue 0 (3-2023)
Abstract
Moving around the city, in any form, entails various material and immaterial costs. For this reason, any change in these costs quickly reflects in traveler behavior. One of the factors that is easily measurable and whose effect is quickly seen in the reaction of passengers is the change in fares. Usually, when fares or fuel prices change, citizens try to make their choices in a way that will result in the lowest cost. If city managers are fully aware of the possible choices of citizens, they can carry out the necessary planning. For this purpose, this study was conducted in a descriptive and analytical manner. The goal was to determine how changes in fares and other costs drive passenger behavior and how the public transportation system responds to this behavior. The required data was obtained from the Mashhad Municipality Transportation Organization and analyzed using the comprehensive vector auto regression method. The study findings showed that eliminating or reducing the cost significantly changes the use of public transportation. Of course, with these changes, different transportation methods do not accept the same load. In addition, if fare changes coincide with external shocks such as changes in gasoline prices, parking costs, etc., passenger density in public transportation will increase significantly. In this situation, each type of system (bus, subway, etc.) will attract a different share of passengers. In this case, policies should be implemented in a way that, while appropriately responding to citizens, does not cause disruption to the urban transportation system.
Volume 1, Issue 0 (1-2022)
Abstract
Aims A family history of obesity, physical inactivity, and an unhealthy lifestyle was associated with an increased risk of diabetes in young individuals. Most published studies had focused on single risk factors such as BMI, Physical activity, and dietary lifestyle, while the combined effect and existence of those factors were largely neglected.
Methods This was a cross-sectional study conducted on 666 male students. Based on their family history of diabetes, their anthropometric measurements were also taken, and their BMI was calculated and categorised based on WHO standards.
Findings The results showed a significant correlation between obesity, family history, and diabetes, with a significant correlation between diabetes and obesity and also had a high positive correlation. While remaining correlations were also significant.
Conclusion The study concluded that a high proportion of students are at risk of diabetes and recommended an integrated intervention program to encourage healthy eating habits and physical activity and improve awareness.
Volume 1, Issue 1 (9-2003)
Abstract
Since most of the stories narrated in Shahname relates to the period after the rise and development of Zoroastrianism, the natural effects of the new religion on these stories, has made some readers imagine that Ferdowsi has had a kind of inclination to this ancient religion of Iran.
This article, by criticizing the mentioned idea, through studying the very text of Shahname, clearly shows that Ferdowsi has not been, but a true moslem.
Volume 1, Issue 1 (9-2003)
Abstract
Unlike contemporary poetry, hemistiches in modern poetry are not arranged on a predetermined and specific style. In fact, by composition of poems, the poet designs the writing structure of his work. It can be said that there exist as many writing structures as the poems composed to this date.
In this article the author endeavors to while reminding the reader of modern poetry’s violation of norms, analyze some aesthetic functions of this genre.
The author focuses on the role played by the style of writing in helping the reader in properly reading a poem and the style’s contribution to the true conveyance of thoughts and feelings as well as distinguishing the images and highlighting the concepts of time and place.
Volume 1, Issue 1 (12-2018)
Abstract
Aims: The assessment of threats and vulnerabilities of critical infrastructure such as urban water infrastructure can, in many cases, significantly reduce vulnerabilities or minimize the consequences of a threat. The aim of this research was to evaluate the components of the contingency and impact severity of human-oriented and natural-based threats in urban water infrastructure.
Instrument and Methods: In this analytical-descriptive study, a library collection method, including the study of books, research, and domestic and International articles of researchers as well as Internet search was used. The data were collected by questionnaire and analyzed by Hazop model and Friedman test, using SPSS 21 software.
Findings: According to the experts, the highest scores were assigned to terrorism acts and suppression, and, ultimately, human error. The most critical type of threat was recognized as chemical attack, military attack, and drought by the Hazop model. The second threat was rocket attacks, earthquakes, and terrorism. The human error ranked next in critical threats. The military attack and drought were recognized as an unacceptable crisis and the probability of a flood, a military attack (ground) and human error were ranked one to three. The impact severity (damage) of the military attack (ground), earthquake, and chemical pollution were ranked one to three, respectively.
Conclusion: The most critical types of threats are chemical pollution in urban water infrastructure, military attack, and drought and are recognized as unacceptable crisis. The probability of flood, military attack (ground), and human error are ranked one to three, and the impact severity (damage) of the military attack (ground), earthquake, and chemical pollution are ranked one to three, respectively.