Pre-revolutionary Iranian economic policy making : An optimal control based assessment

An optimal control macroeconomic model of the Iranian economic is developed in order to evaluate the government's economic policies over the 1972–1977 period. The main results of the study indicate that, after 1973, Iranian planners should have focused on shorter-run stabilization issues and contributed more actively to the budgetary decision-making process. This conclusion is true with regard not only to the longer-run supply effects of the government's programmes, but also to the shorter-run stabilization difficulties posed by the rapidly accelerating level of expenditures.