Date of Award
Doctor of Philosophy (PhD)
Economics / Economic Policy
Professor D. Butterfield
Professor A. Kubursi
Professor D. Welland
This study analyses some aspects of the behaviour of the Iranian economy over the period 1959-1976 with the help of a macroeconometric and input-output model. The model is both demand and supply oriented. Supply considerations are taken to be the main constraint in the development of the Iranian economy.
Both the demand and the supply side of the model distinguish between consumer and investment goods and services. The interaction of the demand and supply side determines the equilibrium level of domestically produced consumer and investment goods and services, and their corresponding prices. For both types of goods and services, demand is considered to be price sensitive, while the corresponding supply is perfectly price inelastic (in the short-run).
As there is no direct information on consumption and investment goods and services provided by each sector of the economy, the Iranian 1973 input-output table is utilized for this purpose. Values or investment and consumer goods and services produced by each sector are calculated and aggregated over seven sectors, namely, agriculture, construction, manufacturing and mining, transportation and communication, services, oil and water and power, to arrive at the total supplies of consumer and investment goods and services.
Demand for consumer goods and services is disaggregated into three categories: urban, rural, and government consumption. Demand for investment goods and services, which arises in all seven sectors of the economy, is distinguished for both private and government demand. The purpose of this detailed breakdown of investment demand is to analyze the behaviour of the economy with respect to different government investment policies in the various sectors.
The model is a non-linear stochastic simultaneous system of 107 equations and identities, out of which 42 are behavioural. To deal with the problem of simultanaeity, the model is estimated with a two-stage least-square procedure, using the principal components method. The estimated model is validated and its performance analyzed through a series of dynamic simulation experiments. The model is used to generate historical forecasts for the Iranian economy, and it could also be applied to ex-ante forecasting.
The present study attempts to examine the effects of different government policies on the agriculture and non-agriculture sectors and their consequence on the economy, through implementations of a series of policy simulations. The study suggests that, although the agriculture sector is less efficient in generating economic activity in the short-run, paying less attention to this sector can generate inappropriate short-run and long-run socio-economic consequences. Such problems are: increasing the gap between urban and rural standards of living, rapid emigration of the labour force from rural to urban areas, higher prices, wages and costs in the agriculture sector, and rapid increases in imports of consumer goods. Therefore, the policy simulation results suggest that any government development policy should consider both agriculture and non-agriculture sectors despite the fact that in the short-run the former is less efficient in generating higher economic activity.
Hoda, Mohammad Hashem, "Macroeconometric and Input-Output Model of the Iranian Economy" (1983). Open Access Dissertations and Theses. Paper 1327.