The Organization of Islamic Cooperation (OIC) member countries has the lowest human development index (0.63) compared with the world average (0.73) and developing countries’ average (0.68). However, the level of human development varies among the member countries, with the majority of the members categorized under low and medium levels of human development. To explore more information about the effect of financial inclusion on human development across different level of human development of OIC countries, this study used panel quantile regression to examine the effect of financial inclusion on low, medium, high and very high human development levels of OIC countries. The results revealed that financial inclusion promote higher human development in countries with medium human development, because of increase in income and investment in countries that move from low-income level to medium income status. Institutions found to promote higher human development in countries with high and very high human development and negatively affect human development in countries with low and medium human development levels. Also, remittance inflows have positive effect on human development across all levels of human development but stronger in countries at lower level of human development. Thus, policymakers in OIC should formulate policies that will promote financial inclusion in low- and meddle-income countries to achieve higher human development. In addition, policymakers should revitalize institutions especially in countries with low and medium human development levels. Also, the cost of sending remittance into OIC should be reduce to attract more remittances into the member countries.
{"title":"Financial Inclusion and Human Development in OIC Member Countries: Evidence from Panel Quantile Regression Method","authors":"Kabiru Kamalu, W. Ibrahim","doi":"10.22059/IER.2021.83903","DOIUrl":"https://doi.org/10.22059/IER.2021.83903","url":null,"abstract":"The Organization of Islamic Cooperation (OIC) member countries has the lowest human development index (0.63) compared with the world average (0.73) and developing countries’ average (0.68). However, the level of human development varies among the member countries, with the majority of the members categorized under low and medium levels of human development. To explore more information about the effect of financial inclusion on human development across different level of human development of OIC countries, this study used panel quantile regression to examine the effect of financial inclusion on low, medium, high and very high human development levels of OIC countries. The results revealed that financial inclusion promote higher human development in countries with medium human development, because of increase in income and investment in countries that move from low-income level to medium income status. Institutions found to promote higher human development in countries with high and very high human development and negatively affect human development in countries with low and medium human development levels. Also, remittance inflows have positive effect on human development across all levels of human development but stronger in countries at lower level of human development. Thus, policymakers in OIC should formulate policies that will promote financial inclusion in low- and meddle-income countries to achieve higher human development. In addition, policymakers should revitalize institutions especially in countries with low and medium human development levels. Also, the cost of sending remittance into OIC should be reduce to attract more remittances into the member countries.","PeriodicalId":38289,"journal":{"name":"Iranian Economic Review","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-10-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48586464","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The objective of this paper is to analyze and measure the systemic risk between cryptocurrencies and real currencies using a value approach in conditional risk exposure and expected marginal shortfall. Systemic risk in finance means the probability of a sudden crash of an entire financial system. This risk can lead to inconsistency or chaos in financial markets. Another important matter in the discussion of systemic risk is the contagion of risk, which is the probability of the spread of major economic changes in a country. In this research, statistical data of real and virtual currencies over the years 2015-2020 are used. For this purpose, the indices of systemic risk were calculated using CoVaR and MES, and then the correlation between the systemic risks of the evaluated currencies was created. In this analysis, the statistical data of the currencies of the exchange rate of the Pound to the Dollar, the exchange rate of the Yuan to the Dollar, the exchange rate of the Lira to the Dollar, the exchange rate of the euro to the Dollar, Bitcoin, Ethereum, Ripple, Litecoin and Ethereum Classic based on the daily price turnover of cryptocurrencies and real currencies are used. The result showed that there was a correlation between the systemic risk indices in relation to the studied currencies and virtual currencies had a lower systemic risk index than real currencies.
{"title":"Analysis and Measurement of Systemic Risk between Cryptocurrencies and Real Currencies Using the Conditional Value at Risk Approach and Marginal Expected Shortfall","authors":"Sadaf Pajooyan, G. Abdoli, A. Souri","doi":"10.22059/IER.2021.83927","DOIUrl":"https://doi.org/10.22059/IER.2021.83927","url":null,"abstract":"The objective of this paper is to analyze and measure the systemic risk between cryptocurrencies and real currencies using a value approach in conditional risk exposure and expected marginal shortfall. Systemic risk in finance means the probability of a sudden crash of an entire financial system. This risk can lead to inconsistency or chaos in financial markets. Another important matter in the discussion of systemic risk is the contagion of risk, which is the probability of the spread of major economic changes in a country. In this research, statistical data of real and virtual currencies over the years 2015-2020 are used. For this purpose, the indices of systemic risk were calculated using CoVaR and MES, and then the correlation between the systemic risks of the evaluated currencies was created. In this analysis, the statistical data of the currencies of the exchange rate of the Pound to the Dollar, the exchange rate of the Yuan to the Dollar, the exchange rate of the Lira to the Dollar, the exchange rate of the euro to the Dollar, Bitcoin, Ethereum, Ripple, Litecoin and Ethereum Classic based on the daily price turnover of cryptocurrencies and real currencies are used. The result showed that there was a correlation between the systemic risk indices in relation to the studied currencies and virtual currencies had a lower systemic risk index than real currencies.","PeriodicalId":38289,"journal":{"name":"Iranian Economic Review","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-10-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45247791","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The study focused on the relationship between external debt management and basic macroeconomic variables performance in Nigeria. The variables for the study which spans the period 1986-2018 where external debt as dependent variable while balance of payment, inflation, unemployment exchange rate and real gross domestic product as independent variables. The study employs cointegration and Vector Error Correction Mechanism (VECM) methods. The findings revealed that balance of payment, inflation and unemployment were the most important determinants of external debt in the long run in Nigeria. The study concluded with empirical evidences that trends in macroeconomic variables can be used to predict movement of external debt to a great extent in Nigeria. The study therefore recommended that external borrowing should not be used for purposes that could deflate the economy but should be channeled towards the provision of goods that would increase the level of economic activities.
{"title":"External Debt Management and Macroeconomic Variables Performance in Nigeria","authors":"Adeteji O. Okutimiren, O. Maku, O. Adelowokan","doi":"10.22059/IER.2021.83904","DOIUrl":"https://doi.org/10.22059/IER.2021.83904","url":null,"abstract":"The study focused on the relationship between external debt management and basic macroeconomic variables performance in Nigeria. The variables for the study which spans the period 1986-2018 where external debt as dependent variable while balance of payment, inflation, unemployment exchange rate and real gross domestic product as independent variables. The study employs cointegration and Vector Error Correction Mechanism (VECM) methods. The findings revealed that balance of payment, inflation and unemployment were the most important determinants of external debt in the long run in Nigeria. The study concluded with empirical evidences that trends in macroeconomic variables can be used to predict movement of external debt to a great extent in Nigeria. The study therefore recommended that external borrowing should not be used for purposes that could deflate the economy but should be channeled towards the provision of goods that would increase the level of economic activities.","PeriodicalId":38289,"journal":{"name":"Iranian Economic Review","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-10-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45765129","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The outbreak of COVID-19 has led to widespread use of mathematical models of epidemiology. These models have a fundamental defect, because they do not consider the interaction between economic decisions and rates of infection. Therefore, the main motivation of the present study is to understand the severity of the effect of health shock on Iran’s oil economy using a Dynamic Stochastic General Equilibrium model. After calibrating the parameters based on the quarterly information of Iran's economy during the period of 1991-2016, the adjusted model has been simulated in three scenarios, based on the persistence of health disaster risk and the deterioration of health capital due to the disease outbreak. The results show that the occurrence of a health disaster risk shock by a standard deviation caused severe fluctuations in macroeconomic and health variables. On the other hand, with the reduction of production and health status, the development path of Iran's economy has been challenged. According to the research findings, it is recommended that the government, as a policy-maker, play a stabilizing role under pandemic crises conditions.
{"title":"Analysis of the Effect of Health Disaster Risk Shocks on Macroeconomic Variables: An Application of Dynamic Stochastic General Equilibrium Models","authors":"A. Keshavarzi, H. Horry, S. A. Jalaee","doi":"10.22059/IER.2021.83922","DOIUrl":"https://doi.org/10.22059/IER.2021.83922","url":null,"abstract":"The outbreak of COVID-19 has led to widespread use of mathematical models of epidemiology. These models have a fundamental defect, because they do not consider the interaction between economic decisions and rates of infection. Therefore, the main motivation of the present study is to understand the severity of the effect of health shock on Iran’s oil economy using a Dynamic Stochastic General Equilibrium model. After calibrating the parameters based on the quarterly information of Iran's economy during the period of 1991-2016, the adjusted model has been simulated in three scenarios, based on the persistence of health disaster risk and the deterioration of health capital due to the disease outbreak. The results show that the occurrence of a health disaster risk shock by a standard deviation caused severe fluctuations in macroeconomic and health variables. On the other hand, with the reduction of production and health status, the development path of Iran's economy has been challenged. According to the research findings, it is recommended that the government, as a policy-maker, play a stabilizing role under pandemic crises conditions.","PeriodicalId":38289,"journal":{"name":"Iranian Economic Review","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-10-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47452444","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study investigates the effect of currency union on intra-regional trade integrations in West Africa. The empirical analysis also examines the interaction effect of institutional quality on currency union-trade flows nexus in the West African region over the period of 1996 - 2019.The study employs a Driscoll-Kraay standard error estimator technique on data obtained from the IMF direction of trade statistics and World Bank governance indicators. The study findings suggest that all the gravity variables (Gross domestic product, population, and distance) are in line with a priori expectations; currency union dummy produced a positive association with intra-regional trade integrations; real effective exchange rate appreciation boosts trade performance, and the interaction of currency union and institutional quality produced a positive impact on intra-regional trade flows among the countries in the West African region. Among the disaggregated institutional quality index, the rule of law and political stability have a significant impact on trade flows. The rule of law influenced trade flows positively, while political stability influenced trade flows negatively. The study concludes that the Rose effect of a common currency on trade exists in West Africa and that the level of institutional quality also subscribes to the currency union trade flows relationship.
{"title":"Currency Union and Regional Trade Integrations in West Africa: The Role of Institutional Quality","authors":"S. Jimoh, Yean Soo Chua","doi":"10.22059/IER.2021.83928","DOIUrl":"https://doi.org/10.22059/IER.2021.83928","url":null,"abstract":"This study investigates the effect of currency union on intra-regional trade integrations in West Africa. The empirical analysis also examines the interaction effect of institutional quality on currency union-trade flows nexus in the West African region over the period of 1996 - 2019.The study employs a Driscoll-Kraay standard error estimator technique on data obtained from the IMF direction of trade statistics and World Bank governance indicators. The study findings suggest that all the gravity variables (Gross domestic product, population, and distance) are in line with a priori expectations; currency union dummy produced a positive association with intra-regional trade integrations; real effective exchange rate appreciation boosts trade performance, and the interaction of currency union and institutional quality produced a positive impact on intra-regional trade flows among the countries in the West African region. Among the disaggregated institutional quality index, the rule of law and political stability have a significant impact on trade flows. The rule of law influenced trade flows positively, while political stability influenced trade flows negatively. The study concludes that the Rose effect of a common currency on trade exists in West Africa and that the level of institutional quality also subscribes to the currency union trade flows relationship.","PeriodicalId":38289,"journal":{"name":"Iranian Economic Review","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-10-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49362863","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This research attempts to measure the knowledge economy by Combining Inductive and Deductive Approaches. In this essay, a comparison between different perspectives on the knowledge economy was done, and then the knowledge economy is defined as “achieving higher productivity levels by utilizing knowledge”. After examining factors affecting productivity, these factors are classified into four categories including 1- Governance quality and business environment; 2- Quality of information and communication infrastructure; 3- Economic freedom and international relations quality; and 4- Level of knowledge and innovation. Subsequently, by calculating the productivity level for 54 countries and dividing the productivity of each country into these four factors above, the contribution of the fourth factor, and the role of knowledge and innovation in the knowledge economy were calculated and presented as the indicator of the knowledge economy. In each of these four categories, three or more indicators were placed, and fifteen indicators were used. The data of the 15 indicators were extracted in a panel containing information from 54 countries between 2000 and 2016. The weight of different productivity factors was estimated using the Bayesian Panel method. Results of the ranking of the selected countries indicate that the United States, Japan, and Germany are leading countries in a knowledge-based economy.
{"title":"Calculating the Knowledge-Based Economy in 54 Selected Countries","authors":"Hossein Abbasi-Nejad, Karim Zahedi Khoozani","doi":"10.22059/IER.2021.84152","DOIUrl":"https://doi.org/10.22059/IER.2021.84152","url":null,"abstract":"This research attempts to measure the knowledge economy by Combining Inductive and Deductive Approaches. In this essay, a comparison between different perspectives on the knowledge economy was done, and then the knowledge economy is defined as “achieving higher productivity levels by utilizing knowledge”. After examining factors affecting productivity, these factors are classified into four categories including 1- Governance quality and business environment; 2- Quality of information and communication infrastructure; 3- Economic freedom and international relations quality; and 4- Level of knowledge and innovation. Subsequently, by calculating the productivity level for 54 countries and dividing the productivity of each country into these four factors above, the contribution of the fourth factor, and the role of knowledge and innovation in the knowledge economy were calculated and presented as the indicator of the knowledge economy. In each of these four categories, three or more indicators were placed, and fifteen indicators were used. The data of the 15 indicators were extracted in a panel containing information from 54 countries between 2000 and 2016. The weight of different productivity factors was estimated using the Bayesian Panel method. Results of the ranking of the selected countries indicate that the United States, Japan, and Germany are leading countries in a knowledge-based economy.","PeriodicalId":38289,"journal":{"name":"Iranian Economic Review","volume":"25 1","pages":"567-585"},"PeriodicalIF":0.0,"publicationDate":"2021-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48273871","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
S. Kordrostami, A. Amirteimoori, Fateme Seihani Parashkouh, M. Mahboubi, M. J. S. Noveiri
In some production processes, unlike traditional data envelopment analysis (DEA), decision making units (DMUs) consume widely used inputs since increasing them is more favorable for improving the efficiency. Plastic wastes and rotten fruits are two instances of widely used inputs for recycling factories. In this paper, weak disposability of inputs will be presented with non-uniform profit factors for inputs, and then the model will be extended to cases which consume normal and widely used inputs, and produce desirable and undesirable outputs, simultaneously. Due to a nonlinear form of the final model, a linearization method is presented to provide a linear structure of the technology. Actually, a directional distance function approach, including weakly disposable inputs and outputs is introduced to deal with widely used inputs and undesirable outputs. Finally, the approach will be tested by applying it on some domestic sewage treatment plants in China. Results show the proposed approach can discriminate between DMUs in a rational way and less computational efforts and also it can be used for the efficiency analysis when widely used inputs and undesirable outputs are presented.
{"title":"Weak Disposability of Input and Output in a Nonparametric Production Analysis","authors":"S. Kordrostami, A. Amirteimoori, Fateme Seihani Parashkouh, M. Mahboubi, M. J. S. Noveiri","doi":"10.22059/IER.2021.83128","DOIUrl":"https://doi.org/10.22059/IER.2021.83128","url":null,"abstract":"In some production processes, unlike traditional data envelopment analysis (DEA), decision making units (DMUs) consume widely used inputs since increasing them is more favorable for improving the efficiency. Plastic wastes and rotten fruits are two instances of widely used inputs for recycling factories. In this paper, weak disposability of inputs will be presented with non-uniform profit factors for inputs, and then the model will be extended to cases which consume normal and widely used inputs, and produce desirable and undesirable outputs, simultaneously. Due to a nonlinear form of the final model, a linearization method is presented to provide a linear structure of the technology. Actually, a directional distance function approach, including weakly disposable inputs and outputs is introduced to deal with widely used inputs and undesirable outputs. Finally, the approach will be tested by applying it on some domestic sewage treatment plants in China. Results show the proposed approach can discriminate between DMUs in a rational way and less computational efforts and also it can be used for the efficiency analysis when widely used inputs and undesirable outputs are presented.","PeriodicalId":38289,"journal":{"name":"Iranian Economic Review","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47169526","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper uses a dynamic stochastic general equilibrium model to investigate the effect of fiscal and monetary policy on the stock market in Iran. Results show that a positive money shock leads to a rise in output, stock price index, and inflation. In addition, the response of the stock demand to money supply shock is negative. We found that a positive government expenditure shock led to a rise in output and inflation. The response of stock demand and stock price index to the government expenditure shocks are negative. Furthermore, results show that a stock market shock leads to a rise in output and inflation.
{"title":"Investigating the Effect of Financial and Monetary Policy on the Iranian Stock Market by Using DSGE Model","authors":"Abdolsamad Rahmani, S. Samadi, R. B. Dastjerdi","doi":"10.22059/IER.2021.84146","DOIUrl":"https://doi.org/10.22059/IER.2021.84146","url":null,"abstract":"This paper uses a dynamic stochastic general equilibrium model to investigate the effect of fiscal and monetary policy on the stock market in Iran. Results show that a positive money shock leads to a rise in output, stock price index, and inflation. In addition, the response of the stock demand to money supply shock is negative. We found that a positive government expenditure shock led to a rise in output and inflation. The response of stock demand and stock price index to the government expenditure shocks are negative. Furthermore, results show that a stock market shock leads to a rise in output and inflation.","PeriodicalId":38289,"journal":{"name":"Iranian Economic Review","volume":"25 1","pages":"509-523"},"PeriodicalIF":0.0,"publicationDate":"2021-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48488837","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Roya Kanour, Abbas Alavi Rad, Akbar Akbar, Akbar Mirzapour Babajan
Policy rules as one of the most acceptable methods in monetary policies are among the significant characteristics of researches about policymaking. A policy rule states how the policy tools should react to changes in economic situations. Understanding the tools and criteria of monetary policies such as changes in target inflation, changes in relative weights of prices stability and employment, and its effect on different sections of society including households and economic firms can help economic policymakers to increase the effectiveness of monetary policies. This paper studies the time consistency and structure of optimal monetary policy from the viewpoint of public sector finance concerning the heterogeneous behavior of economic agents in form of keeping liquidity and nominal assets in Iran. The study utilizes time-series data quarterly from Q1 1989 to Q4 2017. A new Keynesian dynamic stochastic general equilibrium (DSGE) models have been developed for monetary policy analysis in open economies. Results show that the redistribution effect of monetary policy leads to breakage of the link between time consistency and high inflation; a characteristic that belongs to optimal monetary and fiscal policies.
{"title":"Optimal Monetary Policy with Heterogeneous Agents in Iran (1989-2017): A Model Based on Time Consistency Problem","authors":"Roya Kanour, Abbas Alavi Rad, Akbar Akbar, Akbar Mirzapour Babajan","doi":"10.22059/IER.2021.84148","DOIUrl":"https://doi.org/10.22059/IER.2021.84148","url":null,"abstract":"Policy rules as one of the most acceptable methods in monetary policies are among the significant characteristics of researches about policymaking. A policy rule states how the policy tools should react to changes in economic situations. Understanding the tools and criteria of monetary policies such as changes in target inflation, changes in relative weights of prices stability and employment, and its effect on different sections of society including households and economic firms can help economic policymakers to increase the effectiveness of monetary policies. This paper studies the time consistency and structure of optimal monetary policy from the viewpoint of public sector finance concerning the heterogeneous behavior of economic agents in form of keeping liquidity and nominal assets in Iran. The study utilizes time-series data quarterly from Q1 1989 to Q4 2017. A new Keynesian dynamic stochastic general equilibrium (DSGE) models have been developed for monetary policy analysis in open economies. Results show that the redistribution effect of monetary policy leads to breakage of the link between time consistency and high inflation; a characteristic that belongs to optimal monetary and fiscal policies.","PeriodicalId":38289,"journal":{"name":"Iranian Economic Review","volume":"25 1","pages":"535-550"},"PeriodicalIF":0.0,"publicationDate":"2021-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47345608","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The Discount rate is one of the important variables in the inter-temporal analysis which makes it possible to compare the current and the future values and enables economic agents and policymakers to make better decisions. In this context, the discount rate is a vital variable for the accurate evaluation of economic projects. Considering the different approaches that governmental and private sectors use to implement the investment projects, for evaluation of the governmental and public projects, a separate discount rate is used called social discount rate (SDR). In this article by using the structural equation modeling, we have estimated the SDR trend in the Iranian economy during the period 1996- 2016. To do that by extracting influencing & consequence factors of SDR (as a latent variable), we applied a Multiple Indicators and Multiple Causes (MIMIC) model. The SDR trend, as the main finding of this paper, seems to be robust enough due to its explanatory power for fluctuations of the Iranian economy in reality. The results imply that the SDR has had a mild decreasing trend in Iran's economy during the sample period and among influencing variables, the inflation rate has had the most impact on its trend. Accordingly, when the level of prices rocketed during the periods 2012-14, the SDR trend experienced a more than 60% increasing jump. However, the GDP has been the variable that mostly affected by the SDR fluctuations. It seems that controlling inflation and consequently social inflationary expectation can be proposed as a proper policy recommendation to manage SDR and its distorting impacts in Iran.
{"title":"Estimating Social Discount Rate Trend in Iran","authors":"A. H. Mozayani, B. Sahabi, Mehrad Asadi","doi":"10.22059/IER.2021.83445","DOIUrl":"https://doi.org/10.22059/IER.2021.83445","url":null,"abstract":"The Discount rate is one of the important variables in the inter-temporal analysis which makes it possible to compare the current and the future values and enables economic agents and policymakers to make better decisions. In this context, the discount rate is a vital variable for the accurate evaluation of economic projects. Considering the different approaches that governmental and private sectors use to implement the investment projects, for evaluation of the governmental and public projects, a separate discount rate is used called social discount rate (SDR). In this article by using the structural equation modeling, we have estimated the SDR trend in the Iranian economy during the period 1996- 2016. To do that by extracting influencing & consequence factors of SDR (as a latent variable), we applied a Multiple Indicators and Multiple Causes (MIMIC) model. The SDR trend, as the main finding of this paper, seems to be robust enough due to its explanatory power for fluctuations of the Iranian economy in reality. The results imply that the SDR has had a mild decreasing trend in Iran's economy during the sample period and among influencing variables, the inflation rate has had the most impact on its trend. Accordingly, when the level of prices rocketed during the periods 2012-14, the SDR trend experienced a more than 60% increasing jump. However, the GDP has been the variable that mostly affected by the SDR fluctuations. It seems that controlling inflation and consequently social inflationary expectation can be proposed as a proper policy recommendation to manage SDR and its distorting impacts in Iran.","PeriodicalId":38289,"journal":{"name":"Iranian Economic Review","volume":"25 1","pages":"191-203"},"PeriodicalIF":0.0,"publicationDate":"2021-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44143019","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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