Simulation of Aggregate Demand Impacts on the Sectoral Value Added in the Iranian Economy

The purpose of this study is to measure the impact of final demand aggregates on the sectoral value added in the Iranian economy by employing input-output analysis and econometric modelling. This paper presents a model in which the sectoral value added for major aggregate sectors is linked with final demand deliveries. The policy implications of this study highlight the outcome of a sustained percentage shock in each component of aggregate demand, other components remaining unchanged, on the growth of the sectoral value added in four counterfactual simulation experiments. These policy implications can provide insights for decision makers and planners in Iran.