Ali Abbasi; Ali Hussein Samadi; Ebrahim Hadian; Parviz Rostamzadeh
Abstract
The effectiveness of monetary policy is one of the most challenges of monetary authorities. It depends on the interaction between monetary and fiscal policy authorities and private sector behavior. Fiscal authority may or may not respect its intertemporal budget balance. Private agent's behavior in forecasting ...
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The effectiveness of monetary policy is one of the most challenges of monetary authorities. It depends on the interaction between monetary and fiscal policy authorities and private sector behavior. Fiscal authority may or may not respect its intertemporal budget balance. Private agent's behavior in forecasting future values of macroeconomic variables is of the most importance. In standard monetary policy models, it is assumed that the fiscal authority tries to settle its outstanding debt. It is also assumed that, the economic agents forecast the future values of macroeconomic variables with rational expectations. Some studies about fiscal structure of the governments have shown that governments face with sustained budget deficit or accumulating outstanding debt. In this respect, many studies have investigated monetary policy in the context of fiscal authority which is not willing or not able to respect its intertemporal budget balance. At the same time many studies and evidences have shown that expectation formation of economic agents departs from rational expectations and different groups of agents may use different procedures to forecast future values of macroeconomic variables. This paper, taking into account these issues, drives the appropriate monetary rule under heterogeneous expectations and fiscal dominance in Iran. For this purpose, a closed economy dynamic stochastic general equilibrium model with two types of expectations: forward looking rational and backward looking adaptive expectations is used. Simulation results show that a fiscal shock increases production, inflation, investment and decreases consumption. Money growth rate shock increases production, inflation and consumption and decreases investment. Comparing the effects of two shocks shows that the effects of fiscal shock on variables is greater than the effect of monetary shock. It is also shown that increasing the share of non-rational agents increases the volatility of inflation expectations and output gap in response to fiscal and monetary shocks. This shows the importance of anchoring expectations in monetary policy design.
Co2 Emissions
Fatemeh Nematollahi; ahmad sadraei javaheri; Ruholla Shanazi
Abstract
Greenhouse gas emission abatement is an important issue at the center of attention worldwide with the aim of achieving sustainable economic growth. One of the policies put forward in this area is to subsidize investment in research and development and to levy tax on fossil fuels in order to make appropriate ...
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Greenhouse gas emission abatement is an important issue at the center of attention worldwide with the aim of achieving sustainable economic growth. One of the policies put forward in this area is to subsidize investment in research and development and to levy tax on fossil fuels in order to make appropriate technical changes to reduce greenhouse gas emissions. The present paper determines the subsidy rate for investment in research and development to double it with using a computable general equilibrium model. It considers in the first scenarios subsidy payment for investment and in the second scenarios subsidy payment along with, the taxation of fossil fuel consumption. It then examines the economic, welfare and environmental impacts of these policies. The results of modeling and calibration show that in the first scenario, the subsidy rate for investment in research and development is 9.4% and in the second scenario it is 9. 1%. Meanwhile, the tax rate for fossil fuels in the second scenario is 2.5%. The results indicate a reduction in welfare in both scenarios, regardless of the social gains of reducing emissions. The results also show that both the energy tax policy, and research and development subsidy policy is able to reduce energy consumption and air pollution.
Ali Hussein Samadi; Zahra Dehghan Shabani; Atefeh Moradi Kouchi
Volume 5, Issue 19 , June 2015, , Pages 72-57
Abstract
The aim of this paper is to analyze the effects of income inequality on economic growth in 28 provinces of Iran during 2000-2011 by using Geographically Weighted Regressions (GWR) and Dynamic Panel Data (DPD) models. This paper has tried to study the spatial heterogeneity among 28 provinces in Iran by ...
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The aim of this paper is to analyze the effects of income inequality on economic growth in 28 provinces of Iran during 2000-2011 by using Geographically Weighted Regressions (GWR) and Dynamic Panel Data (DPD) models. This paper has tried to study the spatial heterogeneity among 28 provinces in Iran by using the Mont-Carlo and Inter-quartile tests. The results show that spatial heterogeneity exists for income inequality, human capital and logarithm of real per capita income. This paper is focused on geographic weighted model that contain spatial heterogeneity. The empirical results of GWR and DPD models have shown that income inequality has a negative effect on economic growth in Iran.
