سید حسین میرجلیلی

In this study we examined output gap in the Iranian economy. The main question of the study is that how much is seasonal output gap in Iranian Economy and which factor affects gap variation. The other question is that whether using HP-F as a statistical based method for estimating output gap, provide different result than using SVAR as theory based method. Accordingly the aim of study is to estimate potential output and thus output gap using two method and analysis of the result. We used two methods (Hodrick-Prescott Filter and SVAR) to estimate quarterly output gap for the period 1988:1-2008:4. The results pointed out that the estimation is not sensitive to the method and there is a close relation between oil revenue and output gap. In the period of 1998:3-1999:3, when oil price reduced to $11.45 per barrel, Iranian economy faced with a recession and it affected on output gap with a lag. Output gap increased from 34818 in 2004:1-76782 million dollars in 2008: 4. The comparison of estimated output gap and changes of oil price in different periods point out the positive relation. According to the estimations of output gap, output gap in the Iranian Economy has intense fluctuation due to the effects of oil proceeds fluctuations. In some years, actual output is more than potential output, that is, output gap is positive and so this situation can be an important reason for inflation in that period and policy maker must do plans and policies for control of inflation and in some years, actual output is less than potential output and this means output gap was negative. This situation is a reason for unemployment in these years and therefore policy makers must do expansionary policies.

Resource-rich developing countries are forced by economic fluctuations due to international commodity price movement. One way to reduce the volatility adverse effects is to establish institutions such as Sovereign Wealth Fund. However, the way this fund is managed is important. Iran, as a resource-rich developing country, suffers from economic fluctuations. In order to manage resource revenues, National Development Fund (NDF) has been established. In this paper, using DSGE model, we examined different scenarios for managing fund resources. A scenario, without any stabilizer Fund and two different scenario for National Development Fund. In the second scenario, NDF has a role like the one in Sixth Development Plan. In the third scenario, all oil revenues are deposited to NDF and a part of the fund as much as interest rate in the OECD countries plus 70% of long run oil revenues invested in the economy. The Results indicated that the management of oil revenues by the Fund, in which the inflow of oil revenues into the economy follows the commitment, is an appropriate policy to reduce the economic fluctuations in Iran.

In the decade of 1979-1988, there was no development plan in Iran. During 1989-2022, six development plans implemented in Iran’s economy. The assessment of development plans conducted based on the performance and the results of economic indicators over the period. Economic Growth over the course of development plans was volatile. There has been a double-digit inflation rate over the course of the development plans and Productivity and the distribution of income indices were volatile. The challenges of planning in Iran include lack of common understanding on basic concepts of development plans, challenges of comprehensive plan, essential change due to external shocks, time span, parallel initiatives, coordination failure and lack of independent evaluation entity.

Islamic banks had demonstrated significant resilience during the global financial crisis, because of relying on real economic activities , avoiding toxic financial derivatives, and keeping higher liquid assets. However, they were vulnerable afterward in economic crisis. Canadian banks as an example of the most successful conventional banks during both the global financial and economic crisis, also had demonstrated significant resilience, because of institutional setting, prudential regulator, high capital-asset ratio, leverage cap, and conservative mortgage market. Islamic banks can learn from this experience and make a reform on liquidity management , corporate governance and consider the experience of resilient conventional banks.

This paper examines potential output with alternative methods for the period 1978-2008 using annual data of the Iranian economy. We applied Hodrick - Prescott Filter, Production Function and SVAR methods for estimation of annually potential output. The results show that the turning points for these methods look similar and almost produce similar results for output gap. Also the estimated potential output and output gap are conformed to economic and political events as output gap has decreased in war period (1980-1989) because of war expenditures, reducing production and therefore decreasing GDP. Also Iranian economy has been faced with negative output gap and therefore a severe recession because of the crisis in South East Asia in late 1990s. Gap trend is uprising after 2005 for the reason that happening oil shock and economic advancement for increasing oil income.