seyed ebrahim hoseini nasab

Measuring the economic effects of energy subsidy reform and determining how to apply protective measures to reduce its negative effects are the most essential steps in determining the conditions and scenarios of energy price reform. This paper evaluates the effects of energy subsidy reform on inflation and GDP based on approved scenarios by Parliament in 2010 using standard computable general equilibrium (SCGE) model. The results show that reforming energy carrier’s subsidies without income redistribution will result in a significant fall in total production and employment and will lead to higher inflation. On the other hand, supportive government policies and income redistribution resulting from energy price reforms under various scenarios to producers and consumers considerably will compensate increased production costs and will decline the percent of unemployment and reduction in total production. In contrast, the increased liquidity resulting from redistribution increases the pressure of demand and inflation.

The weak axiom of profit maximization (WAPM) is used to analyze the optimization behavior of 18 Iranian banks within 10 years (2000-2009). In general the banks in the Iranian economy can be divided into 2 groups, state and privately owned banks. Nonparametric nature of this test allows us to study the profit maximization behavior of the firms without the need for any assumption on functional form of underlying technology. The WAPM is checked under 2 assumptions: constant technology and nonregressive technological change. Although most of the banks violate the deterministic WAPM test, testing the stochastic WAPM with measurement error and believing in existence of at least 1 percent measurement error in data, show the behavior of the privately owned banks and one of the state owned banks is consistent with WAPM under nonregressive technological change assumption. Although the behavior of the state owned banks is consistent as well if one believes in 5 percent measurement error, the difference leads to this conclusion that performance of the state development policies and objectives by the state owned banks has been deviated from profit maximization behavior.

In this paper, a Dynamic Stochastic General Equilibrium Model have been designed to investigate Fiscal Dominance' effect on social welfare. The designed model has solved by calibration method. Results shows that the degree of fiscal dominance in Iran economy is about 92 percent and decreasing of Fiscal Dominance would lead to decreasing of output loss and increasing of social welfare. However, these results do not mean that the zero degree of fiscal dominance would maximize the social welfare in Iran. Results indicate that increasing of independence of monetary policy to upper than .5 (50 percents) does not any significant positive effect on social welfare.