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Comparison of the Effects of Exogenous Impulses on Iran's Business Cycle under Environmental Policies

Author

Listed:
  • Mahtab Mehrjoo Irani

    (Ph.D. Student in Economics, Faculty of Economics and Administrative Sciences, Ferdowsi University of Mashhad, Mashhad, Iran)

  • Mohammad Ali Falahi

    (Professor in Economics Department, Faculty of Economics and Administrative Sciences, Ferdowsi University of Mashhad, Mashhad, Iran)

  • Narges Salehnia

Abstract

Environmental protection, as one of the Millennium development goals, requires the intervention of policymakers and the implementation of environmental policies to limit the emission of greenhouse gases. This research investigates the consequences of implementing environmental policies on economic variables (including consumption, production, and investment) in Iran's economy from 1978 to 2017. For this purpose, the Dynamic Stochastic General Equilibrium (DSGE) method was used to analyze a closed economy model with the approach of real business cycles. The source of fluctuations in the economy is the momentum of the total productivity of production factors and the momentum of energy prices. Also, the capital is not fully used in the production process. The simulation results show: 1. During the positive momentum of productivity, the emission cap policy has the best performance in reducing the fluctuations of economic variables and greenhouse gas emissions. 2. During the positive momentum of energy prices, the emission cap policy and the emission intensity target policy show the best performance regarding the level and fluctuation of economic variables and pollution emissions.

Suggested Citation

  • Mahtab Mehrjoo Irani & Mohammad Ali Falahi & Narges Salehnia, 2025. "Comparison of the Effects of Exogenous Impulses on Iran's Business Cycle under Environmental Policies," Quarterly Journal of Applied Theories of Economics, Faculty of Economics, Management and Business, University of Tabriz, vol. 12(1), pages 49-70.
    • Handle: RePEc:ris:qjatoe:021663
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    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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