A Macro-Model ofIranian Economic Growth

This article presents a growth model consistent with economic situation of Iran. Various sectors of the economy are expressed by certain behavioral equations. The suggested model, is designed to incorporate findings of the leading theories of economic growth (Harrod Domar) models, Lewis structural change theory, and the Solow growth model. The model is calibrated using statistical data from Iran's first and second five year development plans. Structurally set dynamic, the model is able to show the effects of each policy change, on all macroeconomic variables, through the time. Application of the model to real world data indicates that the use of an exhaustible resource is unlikely to foster a long run development. To apply an open door trade policy, in which the trade impediments, are relaxed, the model states that the imports of capital goods for appropriate investment can improve the national welfare of the economy. Productive investment, both foreign and domestic, is indicated as key factor in saving the economy from debt crisis