Journal of Economic Modeling Research

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In this study, we designed and simulated a system dynamic model to analyze the impacts of energy intensity changes on environmental and economic indicators in Iran. Results show that if the current situation is continued, the industrial sector energy intensity will increase from 2.67 in the base year to 2.704 at the end of planning horizon. So, the sector will consume 540 million oil barrels to create a value added equals 490627 billion Rials in 2025. Accordingly, the amount of environmental pollutants will increase from 59 million tons in the first year to 267 million tons in 2025 and social costs of producing this pollution would be equal to 67, 449 billion Rials. These findings indicate that regarding the limitation of the production and the increasing costs of energy supply in the future, the country's industrial policies should concentrate on technological changes to increase the efficiency of energy consumption. Also, results indicate that industrial energy consumption has destructive effects on the environment and society in the future and the costs in this sector will not be reversible.

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In this study, we estimate the demand for natural gas in the subsection manufacture of basic metals of Iran using structural time series model (STSM) over the period of time 1981-2013. Such model contains unobservable elements which have been transported to state space model with the use of kalman filter and is estimated by implementing maximum likelihood approach. Also, because the Targeting of Subsidies Plan was approved by the Iranian parliament at the end of 2010, so we evaluate the role of this plan on energy demand of industrial subsectors. Finding of the research is that, first of all the nature of the trend is smooth one. Secondly, it is changing on a nonlinear basis. The estimated demand function shows that price elasticity for natural gas in the long and short run, correspondingly, are (-0.30) and (-0.79) and production elasticities of natural gas in the short and long run, correspondingly, are (0.17) and (0.38). Furthermore, Cross elasticity for electricity and gasoline in the long and short run, correspondingly, are substitute and complementary goods. In addition, the result of evaluating effect of the Targeting of Subsidies Plan show that estimated natural gas demand functions can explain the impact of this policy.

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This study explores how monetary and fiscal policies influence certain macroeconomic variables through a multi-sector stochastic dynamic general equilibrium (DSGE) model that includes input-output (IO) analysis. The focus is on the industrial sector, taking into account the specific conditions for Iran. The research uses quarterly data from Spring 2006 to Spring 2023 and references the 2016 input-output table provided by the Central Bank. In the nonlinear model, the original 89 activities from the input-output table have been simplified to 9, which includes the industrial sector and eight other sectors. Model parameters are estimated based on previous studies of the Iranian economy and data from the input-output table. The model's effectiveness is assessed by comparing simulation results with real-world data, which shows a strong correlation. The simulations indicate that increases in the money supply result in only a small rise in both total and industrial output. This leads to a slight decrease in total employment, while employment in the industrial sector experiences a minor increase. Similarly, increases in government spending show tiny improvements in overall and industrial output, accompanied by a slight drop in total employment and a small rise in the industrial sector. The findings suggest that the effects of monetary and fiscal policy shocks on output and employment, when accounting for input-output relationships and dividing the economy into nine sectors, better reflect the realities of the Iranian economy. Given the minimal influence of these policies on boosting production and economic growth, it is essential for them to be targeted and supported by additional measures and strategies.