Test of Time inconsistency of Iran’s Economy

Document Type : Research Paper

Author

Assistant Professor, University of Isfahan, Department of Administrative Science and Economics, Faculty of Economics

Abstract

Time inconsistency is the situation: A decision-maker's preferences
( planner or an agent) change over time. Kydlnd and Prescott) 2004( , declares that the reason of stagflation in the 1970s is due to time inconsistency caused by discretionary government intervention
In this paper, we introduce the phenomenon of time inconsistency, focusing on fiscal policy . To test this phenomenon, the long-run Phillips curve و time series data for the years 1979 to 2009 and the method of ordinary least squares (OLS) , Augmented Dicky Fuler test of Unit root , vectors based on regression (VAR) have been used, locus Crises , recursive and rolling regression is applied. The results show that, Iranian economy is suffering from the phenomenon of time inconsistency, because of government’s fiscal intervention.

Keywords

References

باستانی‌فر، ایمان (1391). «تحلیل قاعدة سیاست پولی در علم اقتصاد و ارائة معیارهای قاعدة پیشنهادی ایده‌آل سیاست پولی»، رسالة دکتری، دانشگاه اصفهان.
باستانی‌فر، ایمان و میرزایی، رخساره (1393).«تحلیل ریشه‌های رکود تورمی در اقتصاد ایران و ارائة راهکارهای برون‌رفت»، بیست‌وچهارمین همایش سالانة سیاست‌های پولی و ارزی، بانک مرکزی جمهوری اسلامی ایران، پژوهشکدة پولی و بانکی.
تشکینی، احمد (1384). اقتصادسنجی کاربردی به کمک ماکروفیت، مؤسسة فرهنگی هنری دیباگران، تهران، ۱۰۱ـ۱۱۸.
قانون برنامة پنج‌سالة پنجم توسعة جمهوری اسلامی ایران ۱۳۹۰- 1394، (1389). روزنامة رسمی جمهوری اسلامی ایران.
نصیری، حسین (1387). «بررسی و تبیین مشکل ناسازگاری زمانی در سیاست‌های اقتصادی»، دو فصلنامة برنامة بودجه، 107، 95-125.
واعظ برزانی، محمد و باستانی‌فر، ایمان (1389). «طراحی بسته‌های نظارتی بانک مرکزی بر اساس مفهوم هژمونی پولی»، بیست‌ویکمین همایش بانکداری اسلامی، مؤسسة آموزش بانکداری ایران، بانک مرکزی جمهوری اسلامی ایران، ۵۱۷- 543.
Aghion, Ph. & Tirole, J. )1997.( Formal and real authority in organization, Political economy,105, 1-29.
Alogoskoufis, G.S. & Smith, R. (1991). The Phillips Curve, the Persistence of Inflation, and the Lucas Critique: Evidence from Exchange-rate Regimes, The American Economic Review, 81(1), 254–75.
Allais, M. (1947). Economie et Intérêt, Imprimerie National, Paris.
Alesina, A. & Roubini, N. (1997). Political Cycles and the Macroeconomic, MIT Press, Cambridge, MA.
Barro, R.J. & Gordon, B.(1983). Rules, Discretion and Reputation in a Model of Monetary Policy, Monetary Economics, 12, 101-121.
Bastanifar, I., Barzani, V., M., Isfahani, D.R. & Dastjerdi, B.R. (2012). Alternative conditions to Time Inconsistency equilibrium of an international Monetary policy, International Economic Studies, 42(1).57-67.
Boschen, J.F. & Weise, Ch.L. (2004). Does the dynamic time consistency model of inflation explain cross-country differences in inflation dynamics, International monetary and finance, 23(5),735-59.
Chappell, H.W. & McGregor, R.R. (2004). Did Time Inconsistency Contribute to the Great Inflation? Evidence from the FOMC Transcripts, Economics and politics,16(3), 233-251.
Collier, P.E., Harry, H.A., Hoeffler, R.Q., & Nata, S. (2003). Breaking the conflict trap: Civil war and development policy, In A co-publication of the World Bank and Oxford University Press.
Cukierman, A. (1992). Central Bank Strategy, Credibility and Independence: Theory and Evidence. MIT Press, Cambridge, MA.
Cukierman, A. & Gerlach, S. (2003). The Inflation Bias Revisited: Theory and Some International Evidence. The Manchester school, 71(5), 541-65.
Dewan, S. & Ettlinger, M. (2009). Comparing Public spending and Priorities Across OECD Countries, Center for American Progress.
Fridman, M. )1968(. The Optimum Quantity of Money and Other Essays, Adlin Publishing Company, Hawthorne, NewYork.
Fox, E. (2011).Countries With The Highest Government Spending To GDP Ratio, What Is Fiscal Policy?
Kydland, F.E. & Prescott, C.E. (1977). Rules Rather Than Discretion, The Inconsistency of Optimal Plans, Political Economy, 85(3), 473-92.
Lucas, R. (1972). Expectations and neutrality of money. Economic Theory, 4.103-24.
Lucas, R. (1973). Some International Evidence on Output-Inflation Tradeoffs, American Economic Review, 63, 326-34.
Lucas, R. (1976). Econometric Policy Evaluation: A Critique. In Brunner, K. & Meltzer, A., The Phillips Curve and Labor Markets, Carnegie-Rochester Conference Series on Public Policy, l1.104-130.
Ludema, R. & Olofsgård, A. (2006). Delegation versus Communication in the Organization of Government. Georgetown University, Department of Economics in its series Working Papers, 06-06-04.
North, D. (1990). Institutions, Institutional Change, and Economic Performance, New York: Cambridge University Press.
North, D. (1994). Economic Performance Through Time, American Economic Review, 84(3), 359-368.
Phelps, E. (1967). Phillips Curves, Expectations of Inflation and Optimal Unemployment over Time, Economica, 34, 254-281.
Phelps, E. & Pollak, R. (1968). On Second-Best National Saving and Game-Equilibrium Growth, Review of Economic Studies, 35, 185-199.
Pool, W. (1999). Monetary Policy Rules? Federal Reserve Bank of S.T Louis.
Romer, D. (2012). Advanced Macroeconomics, McGraw-Hill, Fourth edition, 559-563.
Stotz, R. (1955). Myopia and Inconsistency in Dynamic utility Maximization, The review of economic studies, 23(3),201-08.
UN Human Development Report (2011).
Verwimp, P.P. & Justino, T.B. (2009). The Analysis of Conflict: A Micro-Level Perspective, Journal of Peace Research, 46,307-14.
www.cbi.ir.
www.miseryindex.us/indexbyPresident.aspx.
 
 
Journal of Economic Research (Tahghighat- E- Eghtesadi)
Volume 49, Issue 4 - Serial Number 4
January 2015
Pages 699-727

Files

History

  • Receive Date: 04 March 2014
  • Revise Date: 03 August 2014
  • Accept Date: 30 September 2014

Share

How to cite

Statistics