A Study of the Impact of Saving on Macroeconomic Variables in Iran (CGE Model)

Nazar Dahmardeh, Mahdi Shahraki, Simin Ghaderi

Abstract


Economic fluctuations as well as endogenous and exogenous shocks lead to extensive changes in household saving indexes. Changes of household savings can also influence macroeconomic variables. Thus, in this study, the impact of household savings on Income and Gross Domestic Product in Iran in a Computable General Equilibrium (CGE) Model was investigated. The researchers used Static and Dynamic General Equilibrium Models by applying the Mixed Complementary Problems (MCP) method with two scenarios. In the Static Model, the investigation of households' income indicated that the income earned by urban and rural households through supplying capital and labor hit 0.31% and 0.5% respectively. The GDP in all economic sectors has also increased. Moreover, following the first scenario in the Dynamic Model, the rural and urban households’ income increased by 6.42 %; however, it declined at the same rate as a result of implementing the second scenario, which is indicative of the fact that there is a positive relationship between households’ income and their savings. The average GDP increased by 9.66% thanks to the implementation of the first scenario. In conclusion, it was found that opposite results were reached by implementing the second scenario


Full Text: PDF DOI: 10.5539/ijef.v4n2p204

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International Journal of Economics and Finance  ISSN  1916-971X (Print) ISSN  1916-9728 (Online)

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