Survey of the Balance of Payments Constrained Growth (BPCG) Model in Iran for the period (1357-1393)

The present research surveys the validity of BPCG model in Iran for the period (1357-1393). The income elasticity of demand for imports using the ARDL model was estimated in long run. The average of BPCG rate, the average of actual growth rate, the average of real non-oil export growth rate, and the average of real oil export growth rate were computed for a series of 10-year overlapping periods. The result indicates, if the period of the study is divided by two periods: In the first period, the average of BPCG rate was greater than the average of actual growth rate. It was caused by the excess of average of real non-oil export growth rate over the average of real oil export rate. In the second period, the average of BPCG rate and the average of actual growth rate were reduced and in some decades were negative. It could be as a result of lessening of the average of real non-oil export growth rate than the average of real oil export growth rate. In the second period compared with the first period, the differential of the average of BPCG rate and the average of actual growth rate was less and they were close to each other, validating BPCG model. Considering the model along with the other economic policies such as resistance economy could affect on sustainable economic growth and going out of recession. The results of this research are constant with the findings of the study of Khasawneh and et al.