In: The SAIS review of international affairs / the Johns Hopkins University, the Paul H. Nitze School of Advanced International Studies (SAIS), Band 33, Heft 1, S. 13-36
Over the last decade, the Iranian government budget on military has been higher than the average of the world. The current increasing international sanctions aim to reduce the military capabilities and capacities of the Iranian government. We analyze the response of the Iranian economy to shocks in its military budget from 1959-2007, using Impulse Response Functions (IRF) and Variance Decomposition Analysis (VDA). The Granger causality results show that there is unidirectional causality from the military spending growth rate to the economic growth rate. The response of income growth to increasing shocks in the military budget is positive and statistically significant.
There is an increasing tension between the Iranian Government and the west on an increasingly likely European oil embargo and the Iranian threat to close the Strait of Hormuz. The main question is: What will happen to the international oil prices in the case of shocks in the flow of Iranian oil to the international markets? In this study, we analyze the dynamic relationship between the Iranian oil supply and international oil prices from January 1973 - September 2011, using a modified version of the Granger causality test introduced by Toda and Yamamoto (1995). Our results show that there is no Granger causality between the Iranian oil production and international oil prices. Historical data on the Iranian oil production do not provide any useful information to explain the current and future values of international oil prices. Thus, global oil prices do not follow shocks in the Iranian oil production.
In this dissertation, I investigate the role of oil resources and economic and political institutional quality on the economic performance of Iran. To this end, I examine four related themes. First and foremost, I provide a detailed picture of the economic structure of Iran and compare its performance with other oil and non-oil economies of the Middle East and the Middle Easterb region. As we get a clear picture of the relative economic position of Iran in the MENA region, I go further into macroeconomic analyses of oil wealth effects on the Iranian economy. The second theme investigated in this dissertation is the interaction of political power structure with oil rents and their effects on Iranian economic growth. This study is the first examination which takes into consideration political factionalism interaction with oil rents in the case of Iran. The results show that oil resources have a direct positive effect on economic growth in Iran. However, the interaction effect of factionalism (as a proxy for political asymmetry degree) with oil rents is negative and significant. The third theme which is examined in this study is illegal trade in Iran. This topic is also related to natural resource management in Iran. A large number of fuel products smuggled from Iran are due to heavy subsidies within the country. In this study, I measure the amount of illegal trade in Iran, identifying the major causes and indicators of smuggling. The average of illegal trade in Iran's total trade is 13%. The value of annual illegal trade, on average, is within the range of $ 2.5 - 3 billion. The fourth topic which is examined in this dissertation is macroeconomic populism in Iran. The main source of financing populism spending in Iran is the oil revenues. Therefore, it is connected to the management of natural resources.
AbstractWe investigate the response of the news‐based corruption reflection index to positive shocks in oil rents in Iran. Using annual data spanning from 1962 to 2019, we employ the vector autoregressive model and analyze generalized impulse responses. Our findings reveal a statistically significant and positive (increasing) response of corruption to positive oil rent shocks. The primary mechanisms through which this relationship operates encompass inflation, increased military expenditures, and the erosion of democratic institutions. Our results demonstrate robustness when subjected to alternative corruption measurements, and when considering the role of internal conflict. The outcomes remain consistent regardless of the variable order in the estimation process. Additionally, we offer context from Iran and expound on clientelism in public investment projects, providing insight into how oil rents may contribute to corruption.
Abstract We study the acceptability of war under certain conditions across individuals from Russia and Ukraine on the basis of World Values Survey in 2011. The period of analysis is before the beginning of military confrontations between the two countries (which started with the annexation of Crimea by the Russian Federation in 2014). We discuss which socio-economic, political and individual characteristics shape the justification of war under certain conditions. Overall, the acceptance of war is relatively low in both countries. Using logistic regressions, we found that there are characteristics that significantly reduce the justification of war in both countries, such as gender and level of happiness. Support in both countries is also significantly larger among respondents who are interested in politics and are married. Additionally, there are conditions which produce different results between the countries, such as religiosity, country aims, employment, confidence in the government, concern over possible war and political orientation.
We study the effect of a corruption reflection index on internal conflict in Iran using a novel measure of corruption based on newspaper coverage. We use the Vector Autoregression (VAR) model and its applied tools of impulse response and variance decomposition analyses to track the response of protests to shocks in the level of corruption. Using annual data from 1962 to 2019, we find a positive and significant response of protests to a positive shock in the news-based corruption reflection index. We also show that the main channels where higher corruption may lead to higher internal protests are through economic growth and military spending.
AbstractWe study the response of income inequality to positive per capita oil and gas revenue shocks in Iran. Using historical data from 1973 to 2016 and vector autoregression (VAR) as well as vector error correction (VECM) model‐based impulse‐response functions, we find a positive and statistically significant response of income inequality to oil booms. We also explore possible channels through which oil booms may increase inequality, including private sector credit growth, construction investment, international trade (imports) and real economic output. We find that following an oil boom, higher imports, private sector credit growth, and real economic output can explain the increased income gap to a certain degree in Iran's oil‐based economy. Our analysis can help policymakers evaluate and accommodate the possible positive or negative effects of inequality in Iran resulting from the 2016 lifting of the embargo against the country.