Iranian Economic Review
Volume:25 Issue: 62, Winter 2021

Development is a multi-dimensional process which has evolved over time with conceptual challenges and has undergone different dimensions to complete the word. One of its important dimensions is paying attention to social justice within the framework of regional equilibrium. The present article tries to investigate this important dimension for the tenth government in Iran. With the aim of analyzing regional equilibrium process and providing priorities for the development of the provinces can play an effective role in national policies to promote regional equality and decentralization. Using multi-dimensional decision making (MADM) and Topsis model, after the formation of a Regression and Matrix model with 21 indicators and 157 sub-indicators for the developmental level of the provinces, it was revealed that Tehran and South Khorasan provinces placed first and last respectively and using the cluster model Iranian provinces were categorized into five groups from which one province was a highly developed province, six provinces were  developed, 11 provinces with moderate development, 12 undeveloped provinces and 1 was considered as a deprived province. Among other results of the study, we can mention the direct relationship between the development of regions with population growth and its indirect relation with the spatial distance from the capital for groups of 5 in the cluster method. Also, a ranking of the provinces is presented in terms of institutional indicators.

Psychological studies on decision-making under uncertainty have shown that investors have systematic errors and behavioral biases in decision-making. Thus, market prices are more determined by psychological factors rather than the fundamental variables. In addition, standard asset pricing models based on rational expectations and homogeneity have problems cannot satisfactorily explain the dynamics and volatile nature of financial markets. So an important challenge of the financial theory in recent years is to construct models which have more consistencies with as many financial stylized facts that cannot be explained by traditional models. In this sense, the present study use Agent-based computational approach and more specifically Artificial Stock Market to modeling the market dynamics from a behavioral perspective. The purpose of this study is to point out a possibility that behavioral bias, specially anchoring feature of investors explains most number of financial stylized facts and plays an important role in price formations of financial markets. The results capture great kurtosis and asymmetry of return distribution. Moreover, by using agent-based simulations, the paper also provides a better representation of price dynamics in the financial market.

The aim of this study is to investigate the optimal tax rate in the housing market. Further, an optimum portfolio of investment in housing and business sector is determined in steady-state and Ramsey equilibrium. In addition, optimal tax rate and optimal effective housing capital tax rate, business capital and labor income in steady-state are calculated. Results indicate when housing capital return increases, goods production and capital in productive sectors decreases, thus housing capital must be taxed. Based on the results, the optimal tax rate of housing capital would be equal to 4.12 % and the optimal effective tax rate of housing capital is equal to 1.8 %. Moreover, in this case, the optimal tax rate of business capital and labor income reduce to 10.6 %.

Large external debt stock has been identified as one of the most important factors which have restricted the development of many poor countries. The consensus in the literature remains that external debt promotes growth to the extent that a country does not exceed its debt carrying capacity. Otherwise, additional debt accumulation would serve as a tax on future investment returns capable of creating disincentive to invest in the highly indebted countries. In the light of these arguments, this study investigates the possible role of domestic investment in the non-linear relation between external debt and economic growth in Nigeria over the period from 1981 to 2015. Based on the results of threshold regression analysis employed in this study, the overall findings showed that the impact of external debt on economic growth is sensitive to both measures of external debt used, and whether or not the role of domestic investment is accounted for. Specifically, this study confirmed the existence of the debt Laffer curve associated with the debt overhang theory arising from excessive external debt accumulation. Similarly, empirical support was obtained for the crowding-out effect of excessive external debt servicing. Also, accounting for the role of domestic investment in the non-linear relation between external debt and economic growth reduces the optimal debt carrying capacity of the country. It is therefore suggested that the Nigerian government internalizes a maximum ceiling of 6.81% as the share of external debt stock in gross national income (GNI) so as to enjoy the resulting growth benefits. External debt financing sources that are free of interest charge could also be explored so as to circumvent the burden imposed by excessive external debt servicing.

The purpose of this paper is to examine the effect of population aging effect on trade in major trade partners of Iran during the period 2000-2015. In this paper, we show that demographic differences between countries are a source of comparative advantage in international trade. Since many skills are age-dependent, population aging decreases the relative supply and increases the relative price of skills which depreciate with age. Thus, industries relying on skills in which younger workers are relatively more efficient will be more productive in countries with a younger labor force and less productive in countries with an older population. The results indicated that the secondary education group and the average age of people between the ages of 20-40 and 41-65 years had a positive and significant effect on the exports compared to the elementary and excellent education groups. The results showed that human capital in more experienced age groups by improving job skills leads to comparative advantage and increases in exports of countries.

Today, economists have paid much attention to prediction of currency crises due to their very negative effects on the performance of real economies and the consequences of its subsequent recession. The use of an early warning system for currency crises is therefore introduced as an empirical tool for troubleshooting Iran macroeconomic problems. Based on studies conducted in other countries and using conventional methods of extracting symptoms and estimating crisis probability, an early warning system for currency crises is presented to the Iran economy that can warn currency crises beforehand. Using Multi-layer Perceptron Neural Network and Hard-Limit function, the Early Warning System is basically design to consider seasonal data for the period of 2001 to 2015 to anticipate currency crisis of 2019(based on 12-season warning periods). The results predicted show that no currency crisis is threatening Iran economy in 2019. The export index is one of the leading variables in the system which has the greatest impact on currency crises. In addition, according to the previous data and their substitution in this model, the years 1993, 2001 and 2003 are signaled as critical years. It therefore can be concluded that the present research model is reliable.

From the perspective of local economic development, on the one hand, free zones increase trade and attract some necessary technical and capital expertise and therefore, lead to the economy dynamics. On the other hand, the resiliency of these areas causes free zones to observe less fluctuation over time and will suffer less damage. Today, the concept of efficiency and effectiveness is one of the things to be taken noticed by many economists. Therefore, using the indices of Burman et al. (2013) and Briguglio (2003) and window analysis, this paper is to investigate the resiliency and efficiency of Iranian free zones. Accordingly, using the resiliency indices of Burman et al. (2013) and Briguglio (2003), free zones of Kish, Qeshm, Chabahar, Anzali, Arvand, and Aras over the period of 2011–2015 are evaluated. Results indicate that most free trade zones have not operated in accordance with the resiliency based on the sub-indices of exports rate, imports, ratio of exports to total, trade balance, foreign and domestic investment, employment, income, and the number of registered firms. Results of the DEA indicated that the only free zone is Anzali which was functioning efficiently. Therefore, it is recommended that the government provides conditions for attracting foreign and domestic investment through giving tax incentives, refining laws, custom taxes, etc. The re-export of imported goods can be effective in improving performance in these areas.

In the countries, where it is not possible to disclose corporate income through the banking system, tax evasion through informal sales with the help of a third party is a common phenomenon. This paper tries to model firms’ tax evasion in such a condition. How tax evasion relies on third parties and hiding the share of raw materials purchased in the financial statement depends on the production method. In this paper, the tax evasion will be investigated in the process production method. In addition to the gap between the value added tax rate and corporate income tax rate, the cost structure is an important endogenous factor in tax evasion. The empirical results of the model based on the data from Iran indicate that the tax evasion of process industries is about 18% of tax capacity, which results in a 4% reduction in the government’s tax revenue.

Using Nigeria as a case study, this study shows that changes in oil price is central to the monetary transmission mechanism in oil-producing countries; a phenomenon which can be described as petro-monetary transmission mechanism. Using a Markov state-switching model, this study shows that there are high and low inflation regimes in the Nigerian economy. Oil price has significant impacts on inflation in the two regimes. Among the common coefficients, exchange rate and credit have significant effects. The empirical evidence from the impulse response functions of the VAR model shows that a one standard deviation shock to credit, interest rate, exchange rate, and oil price generates sharp increases in CPI, thus establishing a petro-monetary transmission mechanism in Nigeria. This study therefore establishes the presence of petro-monetary transmission mechanism in oil-producing countries.  The central banks in these countries should therefore consider the oil price channel in the conduct of monetary policy.

Commodity smuggling is considered as one of the issues in the Iranian economy during last decades. Smuggling has had relatively high turnover during recent years and, thus, it has attracted much attention. Although smuggling is often assumed as an economic issue, its non-economic origins are so diverse that it can be regarded as a multidimensional process. Thus, a thorough analysis of this issue should take into account its different aspects. This paper presents an empirical analysis of commodity smuggling in the Iranian economy in terms of political economy. Accordingly, in a descriptive–analytical approach, along with the economic evaluation of smuggling, the non-economic (social, cultural, political, and geographical) dimensions are also studied from national and international perspectives. Results show that in order to fight against commodity smuggling, moving towards equilibrating the markets and relative prices through adopting proper foreign exchange and trade policies coincided with empowering border areas might be recommended.

This paper seeks to provide empirical information of how emigration influences employment and wages in Nigeria with special reference to high and low skill labor between 1980 and 2016. The study is premised on the modified neoclassical labor market theory while generalized method of moments (GMM) was employed as method of analysis. Starting from the drivers of emigration in each skill, economic size, income differentials and remittances play positive and important role in the case of emigration of high skill labor while income differentials and population are significant in driving emigration of low skill workers. Emigration of high skilled magnifies employment and wages of high and low skill workers. In the same vein, emigration of low skill labor has both employment and wage effect with employment being more sensitive. The wage response to emigration for each skill suggests that emigration of high skill labor widens income gap. Additional finding is that wages sluggishly respond to inflation in both labor market segments. Following these results, employment-driven economy should be pursued in order to stem emigration of high skill workers and to create more jobs for low skill workers. Also, remittances should be allowed to function as a source of investment rather than a source of funding emigration. To discourage the adverse effect of inflation on wages, the authorities should ensure low inflation or reduce the impact by ensuring that workers are paid inflation-adjusted wages.

The aim of this study was to examine the causal relationship between exchange rate and bond yield in Indonesia using monthly time series data from January 2006 to December 2018. The exchange rate was proxied by IDR/USD, while the bond yield was proxied by a 10-year government bond yield. The VAR model and Granger causality test were used to test the relationship. The results of the test revealed that in the short-run, there is a two-way relationship between IDR/USD exchange rate and government bond yield. In the short term, the response of the government bond yield to the IDR/USD exchange rate was very strong (significant1%) and also positive in the first three months period. Meanwhile, the response of the IDR/USD exchange rate against the government bond yield was weak (significant 10%). In addition, it was negative in the first 3.5 month period. Furthermore, the study revealed that there is no long-term relationship between the IDR/USD exchange rate and the government bond yield.

A philosophical and aesthetic view to the relationship between art and the economic options or the blending of reason and imagination in the field of relationship between ideas of art and the evolution of economics hasn’t been under survey so far; while this kind of attitude to “art economics” has concerned lots of importance. Usually, in surveying of subjects related to “art economy”, valuating of artworks and the subjects related to the artistic – cultural products representation has been picked a lot of attention. In addition, in subjects related to art economy, paying attention to the works of economic of every artworks art is been concerned in an artistic field which created by such a complicated organization of artistic – cultural – economic and social actors and the media, interpreters, expositive distributers, users, government and private organizations and so on has a specific function in it. But the artist’s aesthetic perspective to the audience in creating different genres and styles by paying attention to his/her own taste in creating an artistic style which end to look deeply in “culture” and intensifies “the economic–social development” and finally, creates “relationship between art and economics ideology and their mutual effects on each other on the aesthetic perspective”, hasn’t been under survey (Rahimi Boroujerdi, 2016). This research has been tried to clarify blind corners of aesthetic aspect by involving imagination and mind around the relationship between Impressionism and economics.