Iranian Economic Review
Volume:23 Issue: 54, Winter 2019

his paper investigates the effect of monetary policy on the distribution of economic activity and agglomeration economies within a country. The considered channel for this effectiveness is the availability of credit to firms in various regions and the effects on the labor and consumer welfare. For this purpose, data for manufacturing firms located in 30 different provinces in Iran during 2007 and 2014 gathered. The empirical results from spatial panel data show that beside conventional channel of effectiveness through consumer and labor force utility function, regional monetary policy implication through uneven distribution of regional loanable banking fund seems to be substantial centripetal force. In terms of most well-known NEG variable, uneven regional accessibility of credit market has opposite regional implication as trade freeness. While the former leads to more concentration of economic activity across space, the latter tends to drive dispersion. It is assumable that monetary policy reduce the impact of credit constraints on firms but the degree of credit availability in regions is a significant driver for concentration of economic activity. The result shows the importance of accessibility to banking loans on distribution of economic activities within the country.

rban poverty has long been a concern of urban and development debates, and has been an important focus in social science research. Informal settlement in Mashhad city is highlighted because of its wide spreading and severity. This study aimed to determine the causes of urban poverty in informal settlement regions. The data were collected from household level questionnaire in 2016 and the Logistic Regression Model was performed to identify the determinants of urban poverty. The data were obtained from 220 households who settled in Shahid Ghorbani quarter using the questionnaire through the Systematic Random technique. Nearly 87% of households of the studied area were below absolute poverty line and 20% of them were below extreme poverty line. Given that all household heads in the sample were married men, significant relationships were observed between poverty and characteristics like “age of household head”, “being self-employed”, “household size”, “the ratio of worker in household”, “ownership of house” and “having social security”, while factors like “Access to services and infrastructures” and “education” had no significant impact on the likelihood of moving out of poverty. The results also revealed that if the household head is older and self–employed, the likelihood of being poor is gradually diminished. Also if the family members had some kind of social security or owned their houses, household welfare would improve; however, increasing in household size and ratio of worker in household would decrease household welfare. Eventually, the marginal effects of variables were interpreted.

he purpose of this paper is the evaluation of suitability ofspatial error STAR model for modeling convergence of social welfare of Iran's provinces between 2000 and 2013. In this paper the LM tests show that the non-linear method is appropriate for convergence evaluation. In addition, the results indicate that 2 groups of provinces are separable: group 1 in which the social welfare growth is affected by the welfare of the regions themselves and group 2 in which it is not merely the effect of social welfare of the regions themselves, and spatial effects are observed among the provinces of this group. Moreover, based on our results, there is convergence among the regions of the first group while there is no convergence among the provinces of the second group.

his paper examines the effect of factors on the development of commercial banking in Iraq. Seven factors used as determinates for financial depth which are per capita GDP, inflation rate, government budget deficit, share of state-owned banks of total assets as proxy of financial repression, oil sector domination, international trade openness and political stability as explanatory variables against the banking development as endogenous variable. By using VAR model, empirically the paper found that the per capita real GDP, the degree of openness and share of state-owned banks of total assets are the variables stimulated the financial depth in Iraq during 1980 and 2010. However other variables did not register any influence for financial development in Iraq. In addition, the paper found unidirectional relationship between financial development and economic growth run from real sector to financial sector.

n this paper, we specify that the GARCH(1,1) model has strong forecasting volatility and its usage under the truncated standard normal distribution (TSND) is more suitable than when it is under the normal and student-t distributions. On the contrary, no comparison was tried between the forecasting performance of volatility of the daily return series using the multi-step ahead forecast under GARCH(1,1) ~ TSND and GARCH(1,1) ~ normal and student-t distributions, until lately, to the best of my understanding. The findings of this study show that the GARCH(1,1) model with the truncated standard normal distribution gives encouraging results in comparison with the GARCH(1,1) with the normal and student-t distributions with respect to out-of-sample forecasting performance. From the empirical results it is apparent that the strong forecasting performances of the models depend upon the choice of an adequate forecasting performance measure. When the one-step ahead forecasts are compared with the multi-step ahead forecasts, the forecasting ability of the former GARCH(1,1) models (using one-step ahead forecast) is superior to the forecasting potential of the latter GARCH(1,1) model (utilizing the multi-step ahead forecast). The results of this study are highly significant in risk management for the short horizons and the volatility forecastability is notably less relevant at the longer horizons.

ousing is a commodity with unique features and its market, especially in urban areas, is characterized by unique business cycles that differentiate it from other commodities. On one hand, housing market can be deeply influenced by economic shocks, and on the other hand, the sheer size of housing investments makes the economy particularly vulnerable to any shock in this market. Hence, analysis of housing markets and their boom and recession periods is of interest to the actors of housing sector as well as economists. This study aimed to investigate the business cycles of urban housing market of Isfahan province (Iran) over the period of 1980-2014, and analyze the trends of private investment in this market by the use of Markov Switching Vector Auto Regression (MS-VAR) model, which has shown great strength in differentiating boom and recession periods. The results show that the periods of boom and recession in Isfahan’s urban housing market both have an expected length of 10 years, and that the business cycles of this housing market run opposite to the business cycle of the national economy.

This study investigates the impact of monetary policy on balance of payments (BOP) adjustment in Nigeria within the periods, 1980-2015. The study used the bound testing approach to show the relationship that exists among monetary policy variables (money supply, domestic credit, inflation and exchange rate), output growth, and trade balance and BOP adjustment in Nigeria. The study shows that there is a long-run relationship between monetary policy variables and balance of payment adjustment. The findings further revealed that in the long-run, money supply and trade balance have positive impact on balance of payments adjustment in Nigeria. On the other hand, domestic credit, exchange rate, inflation rate and gross domestic product suggest a negative impact on balance of payments in Nigeria. An important observation from the empirical estimate is that money supply has more of a long-term impact on BOP adjustment than other monetary policy variables. This study suggests that in stabilizing the BOP position of the country, the apex bank should try as much as possible to balance money supply and demand for money so as to avoid distortion in price.

he main aim of this paper is analyzing the relationship between tax evasion and the monitoring expenditure on tax collectionin Iran. For doing so, we have used a simulation model for determining optimal level of monitoring expenses on tax collection. The results showed that, a greater portion of government expenses must be allocated to monitor the tax collection, although do this reduces tax evasion, but have a negative effect on economic growth. Thus, instead of increasing monitoring expenses in line with reducing tax evasion, it is better to reduce taxes rate in a way that in addition not to decrease in motivation of economic agents activity, it also causes decrease in motivation of tax evasion.

he present paper investigates the impact of the financial crisis on the interaction between the lending rates, deposit rates and money market rates through the process of retail bank interest rate pass-through in the countries of the Euro area. Among our findings is the heterogeneity of bank rate adjustments across sectors, loans and deposits. That was mainly marked during the pre-crisis period by a complete or high long-term pass-through for deposit rates and incomplete for lending rates. However, in the post-crisis period, the degree of pass-through dropped for all bank rates. In addition, we see that the bank rates have become more rigid due to market turbulence since the speed of adjustment towards equilibrium slowed down significantly. Finally, the results show that there is an interdependence of banks' decisions on lending rates as well as deposit rates. It is thus a valuable input in the transmission mechanism of monetary policy.

omegranate product in Khash city causes this city enjoys a considerable advantage in terms of the production of this product. In this paper the performance of Khash township pomegranate producers was evaluated with a comprehensive analysis of supercharged performance. In this regard, the relevant information to complete the questionnaire in 2015 pomegranate growers in Khash city, were collected based on a comprehensive analysis method and the desired results were compared with analysis ubiquitous super-efficiency. In general, the results showed that the average level of technical efficiency in the model assuming constant returns to scale (CCR method) 0.46% and the mean level of technical efficiency in the model, the variable returns to scale (BCC method) 0.68%. Also pomegranate orchards under different levels of technical efficiency is evident that the major cause of inefficiency in the management of inputs, It is suggested that, with proper management and allocation of inputs used in the vineyards, pomegranate production efficiency can be increased.

nflation forecast is one of the tools in targeting inflation by the central bank. The most important problem of previous models to forecast the inflation is that they could not provide a correct prediction over time. However, the central bank policymakers shall seek to create economic stability by ignoring the short-term and temporary changes in price and regarding steady inflation. On this basis, in the present paper, it has been aimed to provide nonlinear dynamic models to simulate the inflation in the economy of Iran using quarterly data referring to 1988- 2012 as well as TVP-DMA and TVP-DMS models. These models can provide changes in input variables as well as changes in the coefficients of the model over time. Based on the results, the possibility of growth of currency in circulation, economic growth, also the growth of deposits either visual or non-visual variables, is more remarkable in modeling of inflation in economy of Iran. In addition, the predictive power of dynamic models presented in this study is more than other models.

he importance of foreign direct investment (FDI) in developing countries has begun to spread very rapidly, especially after the transition of command economies countries into open markets. Many countries see attracting FDI as an important element in their strategy for economic growth because FDI is widely regarded as an amalgamation of capital, technology, marketing, and management. So, it is important to understand why in many countries FDI inflow is lower than the expected. This paper is to investigate the linkages between political risk and foreign direct investment inflows. International country risk guide (ICRG) has dispersed separate financial, economic, and political ratings, and has identified 12 different political risks indices. Theoretically, it seems that there is a relationship between FDI and political risks, which is precisely the analysis undertaken in the current study. This paper employs an instrumental variable approach to investigate Iran time series data from 1985 to 2016. Wu-Hausman test is used to test for the presence of endogeneity, and two-stage least square estimator (2SLS) is estimated to find out the relationship between political risks indices and FDI inflows in Iran. The results show that external conflict, ethnic tensions, socioeconomic condition, investment profile, military, and religious tensions are the highly significant determinants of foreign investment inflows in Iran.