Oil Revenue Volatility, Sanctions and Mismanagement: Lessons from Iran at the International Iranian Economic Association’s (IIEA) Sixth International Conference on the Iranian Economy in Naples (May 16-17, 2019) hosted by the University of Naples “L’Orientale”.
Abstract: The Iranian economy has been functioning below capacity due to years of economic mismanagement, eight years of war with Iraq, as well as prolonged and at times severe trade and financial sanctions. It is clear that the Iranian economy faces serious challenges and requires fundamental reforms, which can no longer be postponed. To this end Iran needs to adopt a comprehensive package of fiscal, monetary, financial and structural reforms aimed at addressing its inter-related challenges. The policy choices are not easy. That said, the Iranian economy has a lot potential.
Long-Term Growth Effects of Climate Change at the Climate Change and Central Banking Workshop in Ottawa (May 10, 2019), organized by the Bank of Canada.
Abstract: We study the long-term impact of climate change on economic growth. Our theoretical growth model postulates that labour productivity is affected by a common technological factor and country-specific climate variables (defined as deviations of temperature and precipitation from their historical norms). Using a panel data set of 174 countries over the years 1960 to 2014, we find that deviations of temperature from its historical norm have a permanent negative effect on real income growth in advanced and developing economies. Our counterfactual analysis suggests that a persistent increase in temperature by 0.01 to 0.04°C per year reduces real GDP per capita by 5.67 to 22.69 percent over a 100--year period. These effects are many times larger than those generally discussed in policy circles. We also argue against the commonly-held view that climate change only affects the economic activity of poor countries by studying the case of the United States. Using data on a sample of 48 U.S. states between 1963 and 2016, we show that climate change has a long-lasting adverse impact on output growth in various states and economic sectors, and on labour productivity and employment. Overall, our findings call for a more forceful policy response to climate change.
Volatility, Macroeconomic Policy and Institutions in Resource-Rich Economies at the Workshop on Macroeconomic Stability and Diversification in Oil-based Economies in Riyadh (April 16-17, 2019), organized by King Abdullah Petroleum Studies and Research Center (KAPSARC).
Volatility and Macroeconomic Policy in the Middle East and North Africa Region at the Symposium on the World Economic Outlook: Implications for Kuwait and the MENA Region in Kuwait (November 12, 2018), organized by the International Monetary Fund (IMF) Middle East Center for Economics and Finance and the Arab Fund for Economic and Social Development (AFESD).
Abstract: In this presentation, I argue that: (1) Volatility is a major problem in the MENA region and macroeconomic policy has not helped. There is a clear role for institutions and the government (fiscal policy) in offsetting some of the negative growth effects due to the volatility curse. (2) The new oil order is a serious challenge for the MENA region, in particular for oil-exporting countries, as lower oil prices weaken domestic demand as well as external and fiscal balances; but also for oil importers, as gains from lower oil prices are offset by a decline in external demand/financing by MENA oil exporters given strong linkages between the two groups through trade, remittances, tourism, foreign direct investment, and grants. (3) The costs associated with climate change volatility in the MENA region are potentially substantial. MENA countries need to act proactively by identifying the related risks to be able to design proper climate policies incorporated into their development strategies and fiscal planning in general.
Sanctions and Upcoming Challenges for the Iranian Economy at a Panel Discussion on the Iranian Economy and Economic Sanctions in London (October 9, 2018), organized by the International Iranian Economic Association (IIEA), London Middle East Institute (LMEI), and Centre for Iranian Studies at SOAS, University of London.
Abstract: Sanctions have, no doubt, harmed the Iranian economy, but one should not underestimate the damage done by years of economic mismanagement. Iran needs a more resilient economy, which implies: strengthened institutions and policy mechanisms which act as shock absorbers in the face of high levels of oil revenue volatility; better conduct of fiscal and monetary policy; growth-friendly fiscal policies as well as structural reforms; private sector investment; diversification; regional development policies should be initiated that give priorities to remote regions that have been left behind.