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The purpose of this blog is to discuss state space models developed for the period 1950-2000 with forecasts typically out to 2100.


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World-System (1950-2000+) How Does the Iranian Economy Work?

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  According to Google AI, the Economy of Iran is facing "significant challenges"   to include international sanctions, inflation, currency devaluation, economic stagnation, corruption/mismanagement, dependence on oil, and brain drain. My forecasts for the  Economy of Iran  are equally pessimistic ( here ). On the other hand, if the  Economy of Iran   were entirely cut out of the World-System (say for twenty years), the World-System would take a big hit ( here ). Before we make any conclusions about either qualitative or quantitative forecasts, it would be useful to understand how the  Economy of Iran   works ( HINT : It's an historically driven economy not a Neoclassical Economy ). From the perspective of   Systems Theory,  the first step is to estimate the state variables (the measurement matrix for the Dynamic Components  state space model is presented in the Notes below). There are three state variables (estimated by Pr...
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World-System (1950-2190) Will US and Israel Attacks on Iran Hurt the World System?

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The IMF is warning ( here ) that US Strikes on Iranian Nuclear facilities could disrupt the World Economy. The major concern seems to be with the impacts on Energy Markets (25% of the seaborn oil trade goes through the Straits of Hormuz ). The IMF has been forecasting slower global growth rates and disruptions in Iran would further affect growth prospects.  The stated intention for bombing Iranian Nuclear facilities is to prevent Iran from getting an atomic bomb.  However, Kenneth Waltz has argued ( here ) that Iran should get the bomb for nuclear balancing and stability in the Middle East. The Trump II Administration has recently signaled that they want Iran to continue as a strong economy in the World-System . The danger is that bombing Iran would lead to a system collapse similar to Syria ( here ). The question again is how important is Iran to the World-System ? The graphic above shows that disabling Iran for 20 years would be a big hit for the World System. If Ira...
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World System (1950-2000) The Impact of the Iranian Revolution

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  The systemic effect of the  Iranian Revolution  was to eliminate cyclical behavior from the System.  Before the Revolution in in 1979, Iran was an unstable, cyclical economy, the cycles being created by Unemployment, Globalization and Environmental damage. After the Revolution, state-space cycles were eliminated. The difference between the two Phase Spaces seems to echo Emile Durkheim's distinction between  Mechanical and Organic solidarity   (see below). You can investigate the effect of stabilizing the Iranian Economy by running the IR_LM model ( here ). Be sure to set SHOCK = FALSE and uncomment the stability lines in the code. The phase Diagram for the period before the Revolution (see above) will look the same but now the movement in Phased Space is toward the center , that is, stable! Notes The IR_LM Measurement Model is: The first state variable (row of the Measurement Matrix,  IR1 ) describes overall growth in the Iranian Economy. The secon...
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