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A Financial General Equilibrium Model for Assessment of Financial Sector Policies in Developing Countries

Author

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  • Haqiqi, Iman
  • Mirian, Narges

Abstract

This paper introduces a real-financial CGE (computable general equilibrium) model for economic policy analysis. It is a multi-investor, multi-asset, and multi-sector model appropriate for what-if policy analysis in a single-country open-economy framework. The financial side includes a central bank, commercial banks, deposits, loans, equities, bonds, and foreign currency. We also consider markets for loanable funds. The model assumes small open economy, imperfect capital mobility, imperfect Armington substitution between imported and domestic commodity, nested CES (constant elasticity of substitution) structure in production, nested CES structure in consumption, and heterogeneity of domestic products in one commodity category. We consider the transport margin, wholesale margin, import tariffs, import subsidy, production tax, value added tax, goods and services tax, and other transfer payments. We calibrate the model based on the 1999 Social Accounting Matrix of Iran. This matrix includes 47 production activities and 112 commodity categories detailed on hydrocarbon resources.

Suggested Citation

  • Haqiqi, Iman & Mirian, Narges, 2015. "A Financial General Equilibrium Model for Assessment of Financial Sector Policies in Developing Countries," MPRA Paper 95841, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:95841
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    References listed on IDEAS

    as
    1. Haqiqi, Iman & Manzoor, Davood & Aghababaei, Mohammad, 2013. "Impacts of Electricity Efficiency Improvements on Factors Market: A Computable General Equilibrium Approach," MPRA Paper 95825, University Library of Munich, Germany.
    2. Asghar, Shahmoradi & Iman, Haqiqi & Zahedi, Raziyeh, 2011. "Impact Analysis of Energy Price Reform and Cash Subsidy Payment in Iran: A CGE Approach," MPRA Paper 95809, University Library of Munich, Germany.
    3. Haqiqi, Iman & Mortazavi Kakhaki, Morteza, 2012. "The Impact of Redistribution of Opportunities on Income Inequality: A CGE Approach," MPRA Paper 95819, University Library of Munich, Germany.
    4. Haqiqi, Iman & Bahalou, Marziyeh, 2015. "A General Equilibrium Analysis of Unskilled Labor Entry and Skilled Labor Exit in Iran," MPRA Paper 95781, University Library of Munich, Germany.
    5. Manzoor, Davood & Haqiqi, Iman & Aghababaei, Mohammad, 2012. "Decomposing Electricity Demand Elasticity in Iran: Computable General Equilibrium Approach," MPRA Paper 95817, University Library of Munich, Germany.
    6. Haqiqi, Iman & Manzoor, Davood, 2012. "Environmental Impacts of Phasing out Energy Subsidies," MPRA Paper 95688, University Library of Munich, Germany, revised 2016.
    7. Manzoor, Davood & Haqiqi, Iman & Aghababaei, Mohammad, 2013. "Economic Impacts of Investment in the Electricity Industry: A CGE Comparison of Regulated and Free Markets," MPRA Paper 95823, University Library of Munich, Germany.
    8. Davood, Manzoor & Asghar, Shahmoradi & Iman, Haqiqi, 2010. "An Assessment of the Impact of Reducing Implicit and Explicit Energy Subsidies in Iran; Using a Computable General Equilibrium Model Based on a Modified Micro Consistent Matrix," MPRA Paper 95808, University Library of Munich, Germany.
    9. Davood, Manzoor & Mohammad, Aghababaei & Haqiqi, Iman, 2011. "Rebound Effects Analysis of Electricity Efficiency Improvements in Iran: A Computable General Equilibrium Approach," MPRA Paper 95810, University Library of Munich, Germany.
    10. Manzoor, Davood & Haqiqi, Iman & Aghababaei, Mohammad, 2012. "Modeling Dutch Disease in the Economy of Iran: A Computable General Equilibrium Approach," MPRA Paper 95821, University Library of Munich, Germany.
    11. Manzoor, Davood & Haqiqi, Iman, 2012. "Impact of Energy Price Reform on Environmental Emissions; A Computable General Equilibrium Approach," MPRA Paper 95818, University Library of Munich, Germany.
    12. Haqiqi, Iman & Aghanazari, Hasan & Sharzei, Gholamali, 2013. "Natural Resources Revenue Allocation: A Dynamic General Equilibrium Approach," MPRA Paper 95785, University Library of Munich, Germany.
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    Cited by:

    1. Nabi, Mahmoud Sami, 2021. "Tunisia after the 2011’s revolution: Economic deterioration should, and could have been avoided," Journal of Policy Modeling, Elsevier, vol. 43(5), pages 1094-1109.
    2. Ngouhouo, Ibrahim & Tchoffo, Rodrigue & Younchawou, Ngouwouo & Tafakeu, Marie-Josée, 2021. "Opening of alcoholic drink establishments during the Coronavirus period in Cameroon: scope and economic consequences," MPRA Paper 108630, University Library of Munich, Germany, revised 2021.
    3. Haqiqi, Iman & Yasharel, Sepideh, 2018. "Removing Fossil Fuel Subsidies to Help the Poor," MPRA Paper 95907, University Library of Munich, Germany.
    4. Haqiqi, Iman & Bahalou, Marziyeh & Hamidi, Razieh, 2014. "Measurement and Evaluation of Equality of Opportunity: A Numerical Look at Education, Health, and Income Inequality," MPRA Paper 95866, University Library of Munich, Germany.
    5. Aghababaei, Mohammad Ebrahim, 2019. "General Equilibrium Resource Elasticity in an Open Resource-Abundant Economy," MPRA Paper 97851, University Library of Munich, Germany.
    6. Tchoffo, Rodrigue, 2021. "Design of a Covid-19 model for environmental impact: From the partial equilibrium to the Computable General Equilibrium model," MPRA Paper 108920, University Library of Munich, Germany, revised 27 Jul 2021.

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    More about this item

    Keywords

    financial general equilibrium; social accounting matrix; financial assets; portfolio optimization; FCGE; Economic Policy;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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