Proceedings of the 19th International Academic Conference, Florence

CAPITAL STOCK SIMULATION BY HARTWICK RULE IN IRAN

SALEH GHAVIDEL, MAHMOUD MAHMOUDZADEH, MIR HOSEIN MOUSAVI, ELHAM BERIMANI

Abstract:

Fully reinvest of natural resource rents in foreign assets or productive capital such as buildings, roads, machines, human capital or health so-called Hartwick rule. The aim of this paper is to estimate the capital stock in Iran by Hartwick Rule. In other word we estimate PIM method and Hartwick rule for calculate capital stock. The result show that estimated capital stock by Hartwick rule is more than PIM method. Therefore, in Iranian economy, Hartwick rule is not applied because part of natural resource income consumed and genuine saving is negative. If the Hartwick rule would have been followed during the last few decades, Iranian economy would have been much less dependent on oil and other resources.

Keywords: Hartwick rule, Natural resource, PIM method, Genuine saving

DOI: 10.20472/IAC.2015.019.050

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