Iranian Economic Review
Volume:20 Issue: 44, Summer 2016

This paper analyses the impact of sanctions against Iran in addition to other country-specific determinants on intra-industry trade between Iran and Shanghai Cooperation Organization (SCO) countries over the period 1997-2013. By disentangling total intra-industry trade (IIT) into horizontal and vertical IIT and after investigating bilateral trade pattern between Iran and SCO countries, determinants of IIT, horizontal IIT and vertical IIT are assessed using fixed effect panel data. Using panel data model, two main findings are released. First, trade barriers indicators and difference in factor endowments are crucial in determining of IIT indicators. Second, sanction index does not have significant impact on IIT measures.

This paper argues that a risk averse of workers after-tax reservation wage the difference between her reservation wage and the tax needed to fund the unemployment insurance system when liquidity constraint binds exists and it is unique. The optimality of unemployment insurance based on the responsiveness of reservation wage to unemployment benefit shows the disincentive effect, i.e. higher unemployment benefit will increase workers after tax reservation wage that will make the exit rate lower. This shows that there is a moral hazard problem. The more one tries to protect the worker against unemployment by raising unemployment benefits and funding the benefits by an employment tax, the more selective she becomes.

This paper proposes an approach to find an optimum structure for educational levels of human forces. To this end, a Linear Programming (LP) Model integrated with a Social Accounting Matrix (SAM) was employed. The integrated model was employed using the SAM of Golestan Province of Iran. It was demonstrated that when unemployment is the result of inconsistency between supply and demand for human force, an optimum structure leads to an increase in human force employment and the value of the object. First contribution of this paper concerns with finding an optimum educational structure for human force with respect to the objective function and conditions of a region or country. The second contribution of this approach concerns finding obstacles in the process of obtaining the objective. Proposing a tool for policy making through sensitivity analysis of educational groups of human forces is yet another contribution of the paper.

This study uses annual data over the period 2005-2014 and the Panel VECM approach to examine financial inclusion and monetary policy effectiveness in Africa. The study shows that financial inclusion and monetary policy effectiveness are linked by a set of long-run relationships. Policy reaction to the positive financial inclusion shock is not significant. Policy reaction to the positive money supply shock is statistically significant and positive in the short-run while reactions are not significantly different from zero in the long-run. On the other hand, the positive interest rate has a positive and statistically significant permanent effect on the level of monetary policy effectiveness. To various degrees, financial inclusion, money supply and interest rate shocks have some role in explaining variations in monetary policy effectiveness, but in the long-run, more than 45 percent of variations in policy effectiveness are explained by interest rate shocks. Moreover, there exists a one-way causality from monetary policy effectiveness to financial inclusion. This study establishes that financial inclusion is not a significant driver of monetary policy effectiveness in Africa. On the contrary, monetary policy effectiveness is the driver of financial inclusion. For increased financial inclusion in Africa, therefore, heightened effectiveness of monetary policy will be required.

The present study attempted to experimentally analyze the effect of fiscal illusion in the form of Flypaper effect on spending demand levels of provincial governments in Iran. To this aim, theoretical foundations and literature review were presented, and then the model used for investigation was specified. Finally, using time series data for provinces of Iran during 2000-2013 estimation and experimental analysis were performed. In Iran’s economy, the central government award grants to the provincial government which are mainly from oil revenues, so that this type of dedicated revenues to provincial governments were considered as the intergovernmental grant (from central government to the provincial government). The results show that in Iran, flypaper effect will be accepted in the provinces of Iran.

This paper attempts to re-investigate the catching-up (stochastic convergence) hypothesis among the selected 16 OECD countries applying the time series approach of convergence hypothesis with annual data over one century. To reach this aim, we propose a model which specifies a trend function, incorporating both types of structural breaks – that is, sharp breaks and smooth shifts using dummy variables and Fourier function respectively. In order to detect the sharp breaks, we apply the multiple structural break models (Bai & Perron, 1998) and the Fourier function proposed in Becker et al. (2004) to capture the smooth shifts. Our results show that most divergence process occurred over World War I (WWI) and World War II (WWII). Among the 69 estimated break points occurred over the period 1870-2010, 75 % of those break points result in catching-up and the remainder results in divergence.

Our basic aim in this paper concerns the question that if overusing the Information Technology by service and manufacturing firms can increase the total productivity resulting from this kind of technology regarding the Iran's economic structure and conditions. For this purpose, we primarily evaluate the productivity resulting from the rate of firm's use of IT for the different firms. To do this, we use Data Envelopment Analysis model and DEAP software. This model's inputs and outputs involve the rate of firm's use of IT and parameters of their performance, respectively. Next step, we divide different firms into three groups (based on the percent of spent costs on their Information Technology as firms with high, medium and low investment on IT, respectively). Then we analyze how the rate of IT spent costs effect on firm's productivity by KW test. The results of these analyses show that when the rate of IT investments in firms is medium, increasing this kind of investment to high level of IT capital can decrease the productivity of the mentioned firms significantly. But when the rate of IT's initial investment is low, any increasing of IT's investment up to medium and high level wont effect on firm's productivity significantly.

This article aims to provide theoretical model for analyzing challenge of asymmetric information in the third sector of economy (which is the most important challenge, preventing the growth and development of third sector), using the theoretical foundation of contract theory and incentive theory with regard to the special characteristics of third sector derived by its special structure in Iran. For this purpose, we introduce a conceptual model that provides a new methodology for analyzing contract theory in the third sector, and offer the optimal contract in every transaction and state. To this end, we put forward the transactional segments of asymmetric information and the possibility of adverse selection and moral hazard problems. Then we provide a general incentive theory for the third sector of economy. As a result, it provides a mathematical and theoretical model for optimal contract and makes contribute to solve the adverse selection and moral hazard problems in the third sector transactions. Eventually, we use experimental analysis (lingo software) to show that mathematical model is solvable. Afterwards we calculate the list of optimal contracts with hypothetical prompters. Field study in Iran (Isfahan) shows that the effect of solving asymmetric information problem is about 73% in the scale of third sector of economy which is significant and notable.