Journal of Economic Modeling Research

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Unobservable productivity shocks cause selection and simultaneity problems in firm’s decisions and these problems cause estimators such as ordinary least squares, have biased estimation for coefficients of production function inputs. In this study, data of five automaker companies in the period of 1383-1387 have been used and production function of car industry have been estimated by ordinary least squares, fixed effects, random effects, Olly and Pakes (1996) and Levinsohn and Petrin (2003a) approaches. The results show that fixed effects and Levinsohn and Petrin (2003a) approaches can’t be appropriate for the production function estimation of car industry. In other words, reaction of automaker companies to productivity shocks will not be done through adjustment in labor, capital and energy demands and there is no significant correlation between inputs adjustment and productivity shocks in car industry. But estimated coefficients of energy and capital in semiparametric, random effects and ordinary least squares approaches show that estimated coefficients of energy and capital in random effects and ordinary least squares approaches are upwardly and downwardly biased, respectively. These results are perfectly consistent with the viewpoint of Olly and Pakes (1996) about bias of traditional estimators and show that automaker companies, in response to the productivity shock, adjust their investment level. In addition based on estimation of semiparametric approach, output elasticity of capital and energy will be respectively 0.82 and 0.64.

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Productivity is one of the important factors in exploration, extraction and production of oil and gas. On the other hands, the literature indicates that the process of economic liberalization is an inventible matter and globalization gradually is improving. So it is important that the effect of oil shocks is considered In Iran. Based on International trade statistics, Shanghai’s countries is one of the most important trading partners of Iran. Therefore, this study investigates whether or not the extraction, exploration and production of oil and gas in Iran is affected by productivity shocks in industry sector of Shanghai’s countries. The Computing general equilibrium approach is used for investigating the effect of productivity shocks on four sectors in Iran (including industry, agriculture, services and oil sectors). Social Accounting Matrix Adjusted 2004 is considered for three scenarios including 3, 5 and 7 percent of productivity shocks (based on world economy trend). The results indicate that the increase in productivity in three industry sector scenarios of Shanghai’s countries declines the oil and gas extraction in these countries, representing efficient use of existing resources and superior technology in other industries as well as focus on oil and gas imports from other countries. So, productivity scenarios indicate that increase in the industrial sector productivity of Shanghai’s countries causes increase in oil and gas extraction in Iran. In addition to showing the relationship between economic of Iran and economic situation of Shanghai’s countries, this issue explains the process of economic globalization.