Dynamic Simulation of Unemployment Rate in Iran

The main objective of this study is to provide a dynamic simulation model of unemployment rate in Iran by using aggregate demand and comparison with the statistics provided by the central bank. The unemployment rates in the period 1976 - 2013 using ex-post simulation and dynamic least squares simulation methods, simulation were done. To this end, at first, by identifying the variables affecting on aggregate demand, equations for consumption, public, private and foreign functions are formulated. Next, using a simultaneous equations system and scenario making, the unemployment rate is dynamically linked to the aggregate demand. One of the successes obtained in the simulation process is high significance of the estimated equations. Simulation results show that the unemployment rate declined from 16.1 percent in 2006 to 15.9 percent in 2009 and then increased to 25.5 percent in 2013.