The Resilience of Iranian Economy Against the Shock of Imported Consumer, Intermediate and Capital Goods: A Structural Macro-econometric Model

Abstract

The vulnerability of Iranian economy to various shocks has attracted attention to economic resilience. In this regard, foreign trade, which is inherently more exposed to shocks, merits careful consideration. In order to examine the effects of imports on economic resilience, a small-scale macroeconometric model has been specified. Having solved the model and run simulations, the effects of shocks stemming from imports on GDP is measured. This study, for the first time, quantifies the concept of resilience by examining the implications of economic shocks in a large-scale macro-econometric model. Accordingly, the modeled system received three types of shocks caused by the imports of consumer, intermediate, and capital goods. Then, the magnitude of their effects on GDP as well as the pace in which the variables back to their equilibrium are analyzed. The results demonstrate that the shocks coming from intermediate goods have the most severe consequences and threaten Iranian economy severely.

Keywords

• economic resilience
• imports
• consumer goods
• intermediate goods
• capital goods
• structural macro-economic model