Ali Mohammadipour; Ali Salmanpourzonouz; Seyed Fakhreddin Fakhrhosseini
Abstract
The purpose of this study was to investigate the impact of price shocks on selected energy carriers in household consumption basket and firm production functions (both supply and demand side of economy) simultaneously on macroeconomic of Iran. The stochastic dynamic general equilibrium model consisting ...
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The purpose of this study was to investigate the impact of price shocks on selected energy carriers in household consumption basket and firm production functions (both supply and demand side of economy) simultaneously on macroeconomic of Iran. The stochastic dynamic general equilibrium model consisting of households, firms, foreign trade and government and central banks has been calibrated and simulated for the Iranian economy. The data related to the estimation of the research model were seasonally available for the period 1996-2006. The final model equations were linearized around the stable state using linearized stochastic equations by the method of Uhlig (1999: 40) as a spatially-state model in the Matlab programming environment. The results of the simulation and analysis of the model's immediate reaction functions show that all price shocks in selected energy carriers, while increasing production costs and creating inflationary conditions, reduce total consumption, total investment and total demand, and after reducing the production of non-oil products and total production, employment decreases. The results of variance analysis also show that most of the changes in employment (compared to production) are due to diesel fuel and electric shocks, respectively, so that 1,08 percent of employment changes (compared to non-oil production), due to diesel fuel shock and 1,01 percent due to electric shock. The severity of the adverse effects created at the employment level during the first 10 periods following the energy price shocks is significant, indicating the need to pay special attention to the unemployment rate when the subsidy targeting law is fully implemented.
Economic Growth
Ali Mohammadipour; ali salmanpour znouz; Seyed Fakhreddin Fakhrhosseini
Abstract
Emphasizing on designing the four paths of oil and energy impact on the Iranian economy, a New-Keynesian comprehensive DSGE model is simulated. In the present study, shocks in the form of two important paths monetary base and government oil revenues are analyzed. Monetary impulses, in addition to inflation, ...
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Emphasizing on designing the four paths of oil and energy impact on the Iranian economy, a New-Keynesian comprehensive DSGE model is simulated. In the present study, shocks in the form of two important paths monetary base and government oil revenues are analyzed. Monetary impulses, in addition to inflation, instantly have a positive impact on nominal and real exchange rates, firms’ investment, employment, production, import of consumer and capital goods. The impulse for government oil revenues in the first period will also increase government development and current expenditure, general price level, import of capital and consumer goods, and household consumption. Then the demand side of the economy is expanded cross-sectionally and increased non-oil production at the rate of 0.8%. In contrast, with the decline in private sector investment and employment, non-oil production has fallen sharply over two periods, even falling from a stable long-term situation, which means that the Resource Curse in the Iranian economy is realizing. On the other hand, as a result of the shocks in oil revenues, the Crowding-Out Effect on the Iranian economy will be strengthened as government capital spending increases and firms' investments decrease.
