The main objective of this study is to contribute toward an analytical and empirical work on the oil-based developing economy of Iran. It focuses on the aggregate behavior of the Iranian economy through a simple linear econometric model. After a survey of the literature on the theoretical framework of macroeconomic models for the developing countries in general, and for the oil exporting developing countries in particular, a linear econometric model for the Iranian economy is formulated and its logical and economical aspects are explained. The proposed model consists of basic consumption, production, foreign trade, and employment relationships. Estimation of the behavioral equations are carried out by Ordinary Least Square and Two Stage Least Square estimators. The model is estimated over the period of 1959-76. Data published by the Plan and Budget Organization of Iran in the 1978 edition of the "Economic Trends of Iran" are used for the estimation of the parameters of the model. Historical simulation of the model has been performed to test the validity and the fitness of the model as a whole. The results obtained from the estimation of the consumption functions seem to indicate that the aggregate Iranian consumption behavior can be best explained by Friedman's Permanent Income Hypothesis. An attempt has been made to estimate the aggregate production function of the urban sector according to various Cobb-Douglas production functions and linear production function with constant returns to scale. All of these specifications gave implausible results. In general, the results of this study demonstrate that the links between different sectors of the Iranian economy are very weak and the import substitution strategy of the government during the period of study failed to establish a genuine domestic industrial base and to reduce its dependence on foreign resources.
| Identifer | oai:union.ndltd.org:pdx.edu/oai:pdxscholar.library.pdx.edu:open_access_etds-1563 |
| Date | 01 January 1986 |
| Creators | Heiat, Abbas |
| Publisher | PDXScholar |
| Source Sets | Portland State University |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | Dissertations and Theses |
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