Iranian Economic Review
Volume:15 Issue: 28, Winter 2011

One of the central concerns in Middle East and the North of Africa (MENA) has been the reduction of poverty and inequality so prevalent in the region. Theoretical predictions on the finance-inequality nexus are inconclusive and mixed. Greenwood and Jovanovic (1990) propose an inverted U-shaped relationship between finance and inequality, while a negative and linear relationship is predicted in some other theoretical models (e.g., Galor and Zeira 1993; Banerjee and Newman 1993). In this study, the relationship between financial development and distribution of income in Middle East and North of Africa is investigated. The study is done by using the GMM estimator based on Dynamic panel data model for 10 countries in MENA region during 2004-2008. The result of this estimation indicates that financial development significantly reduces income inequality in this region. Therefore, policies to improve financial development indicators in the region are suggested.

Housing forms an important sector of the national economy and the largest component of household net wealth in most countries. In this study, Data Envelopment Analysis (DEA) is used to evaluate housing industry performance in different states of Iran based on relevant data collected from the Ministry of Housing and Urban Development and Statistical Centres of Iran during 2008-2009. The results show that only 37 percent of the states operate technically efficient and the average overall efficiency score obtained by all the states is 0.90. On the other hand, 63 percent of the states are found to be relatively inefficient and mostly present decreasing returns to scale. The paper concludes that, appropriate mechanisms should be implemented for all interventions of the government for stabilizing housing environment within different states, ensuring maximal benefit of state housing expenditures, mobilising private savings and finally coordinating public and private sector investment on a multi-functional basis.

This study examines the existence of long run relation between crude oil, natural gas and coal prices. Energy data for US is used and Based on the result of The Augmented Dickey-Fuller (ADF) tests, autoregressive distributed lag (ARDL) approach is adapted to cointegration analysis. Underlying ARDL model is specified in logarithmic form, so that the coefficients indicate the elasticities. Long run relationship and error correction model (ECM) are estimated for selected ARDL. Moreover, to confirm the stability of the model, CUSUM and CUSUMSQ tests are also conducted with the results that the estimated model is completely stable. The results confirm the existence of long run relation between coal, gas and oil prices. However, in short run gas prices have no effects on the oil prices as its coefficient is insignificant.

Efficiency wages is one of the recent new Keynesian theoreis providing a micro foundation to explain real rigidities in the labour market and long run involuntary unemployment. There are many empirical studies on efficiency wages in developed economies, but there is not a well documented evidence for this type of market imperfection in less developed economies. In this paper, we test for efficiency wages using the data from the Large Manufacturing Surveys in Iran for the period 1996- 2005. In our model, we explain wage differentials in the manufacturing sector by a series of firm and employee characteristics, including ownership, size, industry type, education, skill, and gender. Our panel data estimation results indicate that state owned and large firms pay higher wages than private and smaller firms. They also show that education and skills have positive effects on wages, and that there is gender discrimination in the manufacturing section of the labor market. Finally, there are significant wage differentials in the manufacturing sector, even after controlling for all major variables, confirming the efficiency wages hypothesis in Iran.

This paper studies the business cycle characteristics of the Iranian economy and the co-movements of macroeconomic variables with oil prices. As is common in most developing and emerging countries, volatility of business cycles in Iran is high. Except for monetary aggregates, co-movements of business cycles are similar to those of developed countries. The theoretical impacts of monetary policy cannot be supported since results show that they have small negative effects on real output. Findings suggest that supply shocks play prominent roles in the macroeconomic fluctuations of the Iranian economy. Moreover, nominal money and price level are procyclical with oil prices. And different price indexes are procyclical with oil prices.

lthough tremendous progresses have been made in terms of meeting the needs in all walks of life, the question of "ensuring energy security" remains a top priority for all states across the globe, including the super powers particularly the United States, which continues its endeavors to form a hegemonic world order after the collapse of the Soviet Union. The emergence of growing economic powers in the world has triggered further the necessity of having such a strategic vision concerning energy security. At the same time, the Russian Federation, as the main part of the disintegrated Soviet Union and while enjoying huge reserves of oil and gas, keeps trying to play a major role in energy market at regional and global levels. Under such circumstances, the Iranian oil and gas reserves is being considered as a remarkable source for securing energy in the world. The active presence of the United States in the Persian Gulf region, particularly in Iraq and Afghanistan, has escalated the importance of Iran in ensuring energy supply in this strategic region. In this essay, the author considers the impacts of the political and security developments in post- bipolar system era on the role of Iran in energy supply and energy security.

Government budget deficit has been one of the topical issues in the country’s historical economic problems. The budget deficit-inflation relationship is not always obvious and it is different between countries. Since government of Iran has consistently run its economy with a budget deficit and high inflation, this paper re-investigate the deficit-inflation nexus in the Iranian economy by using quarterly data for the period of 1990:1-2007:4. To cary out a test of no structural break against an unknown number of breaks in the Iranian macroeconomic variables, we use the endogenously determined multiple break test developed by Bai & Perron (2003). As, there is a structural break in the time series date, we use Perron(1990) unit root test to test of stationarity. We employ Bounds test approach to cointegration proposed by Pesaran et al. (2001) to investigate the long-run relationship between budget deficit and inflation. The key findings from the empirical studies investigating the relationship between the budget deficit and inflation indicated strong evidence towards supporting a significant and positive relationship between budget deficit and inflation in Iran. At the end, we obtained volatility of budget deficit by using GARCH model, and showed that, volatility of budget deficit has a positive effect on the inflation too.

In this paper we try to investigate relationship between government and economic evolution. In order to accept that the efficiency and inefficiency of a market depends on capabilities of the governments in reducing the transactional costs, guaranteeing the property rights, and removing the traditional market failures. Regarding the new institutional approach it is assumed that the persons (private or public agents) seek their maximum benefits in accordance with the limitations and obligations exacted by that institutional structure. Concerning this assumption we may find out that the market of these services will go to its best status. Moreover, in case that the limitations and obligations enacted by those institution can regulate the behavior of the public agents in a manner that they could seek their maximum benefits in producing these services. These institutions are the rules arising from social culture (convention), formal regulations (such as constitution), and parties. Therefore, the history of economic evolution has had a tied with the historical evolution of these institutions.