The Size of Rent-seeking Activity in Iran's Foreign Trade Sector: An Application of the DSGE Approach
Rent-seeking in the trade sector is an outcome of restrictions imposed on tariffs and import quotas by a government. In an effort to acquire more privilege in foreign trade, labor allocates a part of its time-effort to rent-seeking activity, while cutting down on production work. Given the importanc...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
University of Sistan and Baluchestan
2017-03-01
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| Series: | International Journal of Business and Development Studies |
| Subjects: | |
| Online Access: | https://ijbds.usb.ac.ir/article_3704_39c2266a3a715d463de8bdbcf69e31b4.pdf |
| Summary: | Rent-seeking in the trade sector is an outcome of restrictions imposed on tariffs and import quotas by a government. In an effort to acquire more privilege in foreign trade, labor allocates a part of its time-effort to rent-seeking activity, while cutting down on production work. Given the importance of rent-seeking activity due to restrictions imposed by the government in the Iranian economy, this paper has attempted to calculate the size of rent-seeking activity in the foreign trade sector of the Iranian economy. Hence, a version of the DSGE model has been specified and the related parameters have been estimated in order to calculate the rent-seeking rate. We have applied quarterly data from 1998:1 to 2015:4 for Iran’s trade sector, to obtain the empirical results through calibrating the specified DSGE model. The results have indicated that rent-seeking of Iran’s trade sectors amounted to 0.45, which looks considerably high. Moreover, labor has shared 24 % of its effort time to rent-seeking activity and 76 % to ordinary work. |
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| ISSN: | 2538-3302 2538-3310 |