What Is the Appropriate Time for Policy Implementation at the Macroeconomic Level in Iran?

Document Type : Original Article

Authors

1 PhD Candidate in Economics, School of Industrial Engineering, Iran University of Science and Technology, Tehran, Iran.

2 Associate Professor, School of Industrial Engineering, Iran University of Science and Technology, Tehran, Iran

10.29252/ecoj.10.4.76

Abstract

In many cases, the Iran's new economic policies have been implemented suddenly. In this type of policy implemantation, there will be no allowance for the various sectors of the economy to coordinate with new policies and this will result in significant losses to the economy. On the other hand, in today's dynamic environment, delays in implementing economic policies diminish their effectiveness. The question is, "What is the optimal duration to implement the macroeconomic policies?" In order to answer this question, a system dynamics model is formulated for the Iranian commodity and labor market with 61 variables. In this model, three variables of adjustment duration are considered for the policies of total output, investment and labor. By combining the acceptable values ​​of these three variables, 18 scenarios were designed and simulated over a 50-year period from 2000 to 2050. The results of the simulation for different scenarios were compared in terms of unemployment and economic growth. According to the best scenario, the optimal duration to implement monetary, financial, and investment policies is 24 months. In this scenario, the economic fluctuations are damped and the economy moves toward the long run equilibrium.

Keywords

References

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