Simulation of Aggregate Demand Impacts on the Sectoral Value Added in the Iranian Economy

Valadkhani, Abbas (1997): Simulation of Aggregate Demand Impacts on the Sectoral Value Added in the Iranian Economy. Published in: Australasian Journal of Regional Studies , Vol. 2, No. 3 (1997): pp. 177-200.

Abstract

The purpose of this study is to measure the impact of final demand aggregates on the sectoral value added in the Iranian economy by employing input-output analysis and econometric modelling. This paper presents a model in which the sectoral value added for major aggregate sectors is linked with final demand deliveries. The policy implications of this study highlight the outcome of a sustained percentage shock in each component of aggregate demand, other components remaining unchanged, on the growth of the sectoral value added in four counterfactual simulation experiments. These policy implications can provide insights for decision makers and planners in Iran.

• Item Type: MPRA Paper
• Language: English
• Keywords: Iran, Input-output, Asia
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E23 - Production

References

Arrow, K.J. and Hoffenberg, M. (1959), A Time Series Analysis of Interindustry Demand, North-Holland, Amsterdam.

Behrman, J.R and Hanson, J.A. (1979), Short-Term Macroeconomic Policy in Latin America, Balinger, Cambridge, Mass.

Bhagwati, J.N. (1987), "Directly unproductive profit-seeking (DUP) activities", in The New Palgrave Dictionary of Economics, Eatwell, J. et al. (eds.), Vol. 1, Macmillan, London: 845-7.

Bodkin, R.G. (1976), "A large-scale input-output econometric model of the Canadian economy (CANDIDE)", in Advances in Input-Output Analysis, Polenske, K.R. and Skolka, J.V. (eds.), Ballinger, Cambridge, Mass: 27-44.

Bodkin, R.G., Klein, L.R., and Marwah, K. (1991), A History of Macroeconometric Model-Building, Edward Elgar, Aldershot.

Bon, R. and Bing, X. (1993), "Comparative stability analysis of demand-side and supply-side input-output models in the UK", Applied Economics, 25(1): 75-9.

Central Bank (various issues), Iran's National Accounts (1988-1990), Department of Economic Accounts, Central Bank of Iran, Tehran (in Persian).

Chalmers, J.A. (1972), "On linking supply and demand in macro models of developing countries: with an illustration involving Thailand", Malayan Economic Review, 17(2): 121-42.

Charemza, W.W. and Deadman, D.F. (1992), New Directions in Econometric Practice, Edward Elgar, Aldershot.

Chowdhury, A. (1984), "Integration of input-output and macroeconometric models: a review of alternative methodologies", Singapore Economic Review, 29(1): 97-115.

Cuthbertson, K., Hall, S.G. and Taylor, M.P. (1990), Applied Econometric Techniques, The University of Michigan Press, Ann Arbor.

Dickey, D.A. and Fuller, W.A. (1979), "Distributions of the estimators for autoregressive time series with a unit root", Journal of the American Statistical Association, 74(366): 427-31.

Dickey, D.A. and Fuller, W.A. (1981), "Likelihood ratio statistics for autoregressive time series with a unit root", Econometrica, 49(4): 1057-72.

Economic Commission for Asia and the Far East (1968), "Projections of the trade gap for Iran to 1970 and 1975", Feasible Growth and Trade Gap Projections in the ECAFE Region, ECAFE, Bangkok: 96-101.

Fisher, F.M., Klein, L.R., and Shinkai, Y. (1965), "Price and output aggregation in the Brookings econometric model", in The Brookings Quarterly Econometric Models of the U.S., Duesenberry, J. et al., (eds.), Rand McNally, Chicago.

Fuller, W.A. (1976), Introduction to Statistical Time Series, John Wiley and Sons, Inc., New York.

Gujarati, D.N. (1995), Basic Econometrics, 3rd edn, McGraw-Hill, New York.

Hebden, J. (1983), Applications of Econometrics, Philip Allan, Oxford.

Heiat, A. (1986), An Econometric Study of an Oil-Exporting Country: The Case of Iran, an unpublished Ph.D thesis submitted to the Portland State University, Portland, Oregon.

Karshenas, M. and Pesaran, H. (1995), "Economic reform and the reconstruction of the Iranian economy", Middle East Journal, 49(1): 89-111.

Klein, L.R., (1965), "What kind of macroeconomic model for developing economies?", The Econometric Annual of the Indian Economic Journal, XIII(3): 313-24.

Klein, L.R. (1978), "The supply side", The American Economic Review, 68(1): 1-7.

Klein, L.R. (1983), Lectures in Econometrics, North-Holland, Amsterdam.

Klein, L.R. (1989), "Development and prospects in macroeconometric modelling", Eastern Economic Journal, 15(4): 287-304.

Kresge, D.T. (1969), "Price and output conversion: a modified approach", in The Brookings Quarterly Econometric Models of the U.S., Duesenberry, J., et al., (eds.), Rand McNally, Chicago.

Marzouk, M.S. (1975), "An econometric model of Sudan", Journal of Development Economics, 1(4): 337-58.

Morishima, M. et al. (eds.) (1972), The Working of Econometric Models, Cambridge University Press, Cambridge.

Noferesti, M. and Arabmazar, A. (1994), "A macroeconomic model for the Iranian economy", Journal of Research and Economic Policies, Tehran, 2(1): 5-39 (in Persian).

Oshikoya, T.W. (1990), The Nigerian Economy: A Macroeconometric and Input-Output Model, Praeger, New York.

Pesaran, M.H. (1995), "Planning and macroeconomic stabilisation in Iran", DAE Working Papers Amalgamated Series No. 9508, Department of Applied Economics, Cambridge University, Cambridge.

Pindyck, R. and Rubinfield, D. (1991), Econometric Models and Economic Forecasts, 3rd edn, McGraw-Hill, New York.

Plan and Budget Organisation, (1989), The Iranian Input-Output Table for 1984: The Design of Basic Lines in the Manufacturing Self-Sufficiency, Report No. 3, Plan and Budget Organisation, Tehran.

Plan and Budget Organisation (1990), A Summarised Version of the First-Five Year Economic, Social and Cultural Development Plan of the Islamic Republic of Iran (1989-93), Plan and Budget Organisation, Tehran.

Plan and Budget Organisation (1994), Information Data-Set (Time Series for National, Monetary and Financial Accounts Statistics), Macroeconomic Bureau of the Plan and Budget Organisation, Tehran (in Persian).

Preston, R. (1972), The Wharton Annual and Industry Forecasting Model, Economic Research Unit of the University of Pennsylvania, Philadelphia.

Preston, R. (1975), "The Wharton long term model: input-output within the context of a macro forecasting model", International Economic Review, 16(1): 3-19.

Sapir, A. (1976), "A note on input-output analysis and macroeconometric models", Journal of Development Economics, 3(4): 377-83.

Seguy, R.M. and Ramirez, J.A. (1975), "The use of input-output analysis in an econometric model of the Mexican economy", Annals of Economic and Social Measurement, 4(4): 531-52.

Tofigh, F. (1992), Input-Output Analysis in Iran, Islamic Revolution Publication and Education, Tehran (in Persian).

United Nations Conference on Trade and Development (1968), "Trade Projections for Iran", Trade Prospects and Capital Needs of Developing Countries, United Nations, New York: 318-39.

Vakil, F. (1973), "An econometric model for Iran: estimated structural equations", Central Bank Bulletin, March-April: 633-55 (in Persian).

West, G.R. (1993), Input-Output Analysis for Practitioners: An Interactive Input-Output Software Package User's Guide Version 7.1 (GRIMP), Department of Economics, The University of Queensland, Brisbane.