Iranian Economic Review
Volume:21 Issue: 46, Winter 2017

his paper investigates the gain of bilateral trade between China and U.S. in manufacturing sectors when both countries play a role in asymmetric (biased) growth of international trade. Our model includes a special case of Biased Growth Theory in international trade. We collected labor productivity, export and import data by using classification of manufacturing industries, for U.S. and China in 1993, 1998, 2002 and 2006. The results according to Cost-Benefit analysis and econometric model indicated that the China's manufacturing sector is Import-Biased Growth and U.S. manufacturing sector is Export-Biased Growth. Therefore, The Terms of Trade between U.S. and China in manufacturing sector has been changed in favor of China.

The relationship between technology and international competitiveness dates back to the neo-technological trade theories of the 1960s. This approach considers difference in technology as the primary motive for difference among nations in terms of trade performance. The technology gap approach emphasizes inter-country differences in innovativeness as the basis for international trade flows. The gravity equation is the most successful and celebrated empirical model in international Trade. The empirical gravity literature does not include any form of multilateral resistance in the analysis. The importance of using fixed effects to control for country-specific characteristics has been emphasized in an influential paper by Anderson & Van Wincoop (2003). This paper investigates the effect of innovation on international trade. It examines the impact of R&D as a proxy of innovation on three medium high-tech industries exports in Iran, Japan, Korea and Australia using panel data method over a period of 10 years. We incorporate an industry-specific intercept into the model for estimating the role of innovation in explaining industry-level trade across selected countries. Our findings show that innovation has a positive and economically large effect on export performance of all industries. This suggests innovation is a central driver of trade.

One of the effective strategies for economic development of clusters is the conduct of networking activities by cluster members. Indeed, the majority of cluster members are micro and small enterprises, so, should attempt to overcome their inherent constraints and influence the market through networking activities. In addition, these enterprises lack an intra-firm research and development unit due to their limited financial and knowledge resources. Therefore, the execution of improvement projects by the BDSs situated in clusters plays an undeniable role in the development of clusters. Given the important role of networking activities and improvement projects in the economic development of industrial clusters, this study aims to investigate the efficiency of Iranian agricultural clusters in using these two important input factors, namely networking activities and improvement projects. In this regard, the final outputs, including the total sales and employment rates will be examined so that some strategies and guidelines can be offered to policy makers for the development of these clusters. DEA has been used to evaluate the effectiveness of networking activities and improvement projects in the performance of the six Iranian agricultural clusters under study. Based on the results obtained from the analyses, some solutions were suggested to promote the effectiveness of networking activities and improvement projects.

Whether the United Kingdom (UK) should remain in the European Union (EU) or not has been a fiercely debated issue both before and after the referendum in the UK on June 23, 2016.
The main purpose of this paper is to evaluate the pros and cons of the UK leaving the EU. It is concluded that if the UK leaves the EU, the resulting economic shock would risk adverse effects on macroeconomic variables such as foreign trade, high inflation, employment level, interest rate, aggregate supply and aggregate demand, trade creation and diversion, balance of payments, balance of trade, term of trade, depreciation of the pound sterling, rising consumer price index (CPI) and reduction in the standards of living in the UK. Effects of leaving the EU on money market, labour market and goods market in the UK have also been explored to show the effects on the exchange rate, the interest rate, nominal and real wages and output level in the UK. It has therefore been concluded that it is not in the best interest of the UK to leave the EU. Benefits of remaining in the EU far outweigh the disadvantages.

Exchange rate is an important factor influencing price indices of exported goods of a country in different ways. Imported intermediate commodity is one of the important ways by which the change in exchange rate affects price indices of the exported goods. Using the input-output table of Iran for the year 2001, this paper investigates the impact of exchange rate devaluation on price indices of exported goods in Iran. The results of the research indicate that, when all agents do not adjust their earnings exactly with respect to price indices of products, the exchange rate pass-through is partial; therefore the increment in the level of exported prices is less than that of exchange rate variation. In contrast, when all agents adjust their earnings with respect to price indices, the price indices of all products will increase as much as exchange rate variation, hence, the pass-through is complete, and as a result, the current devaluation policy is neutral.

This paper investigates the asymmetric behavior of inflation. We use logistic smooth transition autoregressive (LSTAR) model to characterize the regime-switching behavior of Iran’s monthly inflation during the period May 1990 to December 2013. We find that there is a triple relationship between the inflation level, its fluctuations and persistence. The findings imply that the behavior of inflationary process is asymmetric. There are two inflationary regimes in Iran’s economy, one is stable with little fluctuations, and the other is unstable that lead to higher inflation, more fluctuations and higher persistence. The results also show that the persistence of inflation is significantly and positively related to inflation level. Therefore, the inflation tends to converge towards the long-run value slowly in the high-inflation regime compare to the low-inflation regime. For this reason, inflation rates tend to be self-generating and self-perpetuating inflationary process in the higher-inflation regime (for example after 2011), while in the lower-inflation regime (for example during 2000 to 2005) is not.

Steel industries play a key role in the national economy and welfare of the society in many steel manufacturer countries. It is found that manufacturing and consuming of steel products would be a key indicator to measure and evaluate economic and industrial performance of a country. Nowadays, countries with the large natural oil and gas resources (e.g. Iran) attempt to select an alternative economic approach to utilize the resources in steel manufacturing rather than export the raw natural resources. While steel products have an enormous consumption market in the world, having the national and international consumption markets is still challenging. The aim of this research is to investigate and identify the effects of marketing mix elements on steel industry export. To this end, a case study conducted on export of Iran’s steel products in the trading-industry marketing views. According to the marketing mix elements approach, 30 variables were studied. In this research the quantitative descriptive-analytic method was used to collect and analyse data. All data obtained using questionnaires. Findings and results show that the price element is the highest priority amongst other marketing mix elements.

The relationship between the price of oil and the level of economic activity is a fundamental empirical issue in macroeconomics. In this research, by using a multivariate GARCH-in-Mean VAR, we try to investigate direct effects of uncertainty of oil price on macroeconomics of Iran by using annually data from 1965 to 2013.Results show that uncertainty about oil prices had a negative and significant effect on real output in our sample.

In the past decades, the effect of different tax amendments on various economic issues has been studied. The majority of these studies have avoided considering shadow economy as part of the calculation and analysis, and an issue, which has received little attention, is the relationship between green tax reforms and shadow economy, as for informal labor, which is well-connected to unemployment rate, and, consequently, welfare. On this basis, in order to make the CGE model more compatible with the real world, this relationship has been investigated in a mathematical model. Finally, in order to perform the calculations, the presented model has been implemented and analyzed on social accounting matrix (SAM) of Iran. Computational results show impact of change in labor tax and capital tax on environment (CO2 emission), GDP, social welfare and unemployment. Based on presented analysis, change in shadow economy has a high impact on unemployment rate and informal labor. Sensitivity analysis on size of shadow economy shows that reducing CO2 emissions, bigger shadow economy leads to higher social welfare. The results indicate the efficiency of the model.

The objective of this study is using the Markov Switching Vector Autoregressive method and regime dependent impulse response functions to measure the pass-through of world food prices to consumer price index in Iran from 1990 to 2013. With respect to information criteria and the log-likelihood ratio statistic, MSIA(2)-VAR(1) model has a better fit to data than other models. The magnitude of the pass-through in first and second regimes is respectively 0.43 and 0.94 after two years. We show that the magnitude of the pass-through from world food prices to consumer price index resulting from recent world food price shocks has been higher than before.