Quarterly Journal of Quantitative Economics (JQE)

Examination of Dutch Disease in Iranian Economy with Emphasis on Impact of Terms of Trade on Investment Structure

https://doi.org/10.22055/jqe.2009.10691
Volume 6, Issue 23 - Serial Number 4
Spring 2010
Pages 147-172
Quarterly Journal of Quantitative Economics (JQE)

Document Type : Research Paper

Authors

Mostafa Karimzadeh
Khadijeh Nasrollahi
Saed Samadi
Rahim Dallali Isfahani
Majid Fakhar
Abstract
Volatility of terms of trade has particular features in oil exporting countries. A large part of the variability of the terms of trade is associated with extreme movements in oil prices. In this paper we study Dutch Disease in Iranian economy with emphasis on impact of terms of trade on tradeable and non-tradeable investment by cointegration technique in period (1971-2003). First, we consider Corden and Neary theory about Dutch Disease. Second, we derived the investment function according present value criteria, accelerator principle and neoclassical theory of investment. This model included of GDP, CPI, rate of interest and terms of trade. Third, we estimated this model by Johnsen-Juselius cointegration technique. We find a long run relationship among these variables. Our results verified existence of Dutch Disease in Iranian economy.

Keywords

dutch disease
Terms of trade
tradeable and non-tradeable investment
corden and neary theory
cointegration vector
  • Receive Date 02 July 2014
  • First Publish Date 02 July 2014
  • Publish Date 22 December 2009

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