Iranian Economic Review
Volume:1 Issue: 1, 1994

Since the breakdown of the Bretton Woods System, exchange arrangements of countries have become flexible. Several attempts have been made to determine whether the theories of optimum currency areas adequately explain the choice of an exchange rate system.
In this paper, the optimum currency area is retested. Using cross-section data, a regression analysis of the choice of an exchange rate system is performed, applying ordered and multinomial logit techniques. An important result of this analysis is the failure to reject the hypothesis that flexibility is the latent variable underlying the exchange rate system.

This paper presents an oil price cartel model. The aggregate reaction functions for non-cartel producers and for substitute suppliers are included. The former group acts as a price-taker, while the latter expects oil prices in production of its non-oil energy resources. This expectation about prices affects a cartel’s oil demand and, thus, gives intertemporal price elasticities It turns out that if these elasticities are positive, Hotelling’s rule does not apply to a cartelized market in which a cartel behaves as a price-maker.

In this paper, a method for establishing a support criterion or poverty line is developed based on Engel’s Law and domestic nutritional values. The support criterion is differentiated across rural and urban areas. An important result is that for 1989, people who spend less than 108,000 Rials annually lie inside the poverty line in urban areas. A further important result is that food should be given to the poor instead of money since the food allowance may not be spent appropriately and may lead to abuse.

increasing concern with income distribution effects rather than growth effects of government activities has prompted numerous incidence analysis of government tax and expenditure behavior, in this paper, the extent of government contributions to changes in income inequality is analyzed for the Iranian economy. Some major findings of this research is that income distribution in urban areas was more unequal than in rural areas. Taxes had negative redistributive effects although these negative effects were higher in urban than rural areas.
In addition, government expenditures were found to reduce inequality as the lower income households received a greater share of the benefits than their share of total income. However, fiscal policy was not strong enough to reduce post-fiscal urban/rural income disparities, despite the fact that it had minor positive effects towards reducing inequality.

The purpose of this paper is to examine and evaluate the effects of government intervention on the Iranian economy over the last few decades. It is shown that public expenditures affect the value added of each economic sector not only simultaneously, but lagged over several periods. Regression results show that the value added from the agricultural sector has never been affected by government expenditures during the period of study. Estimation of both the linear and logarithmic models concerning the industrial sector leads to the same results. These results do not imply that we should reduce the level of government expenditures, instead we should strive to find reasons behind the inefficient performance of the public sector.

In this article, the set of institutions which embody the form and contents of the economic system of Islam is introduced. By institutions, it is meant the economic freedoms, the government, ownership, motivation, the mechanism for coordinating economic activities, power, organization and bureaucracy. After explaining Islam’s outlook regarding these institutions, the form and the contents of this system are introduced to some extent in a manner that its outcome is not rendered incompatible with the spirit that religion aims to establish on the pillars of the social system.