Prioritization of Remedial Approaches for Dealing with Dutch Disease Consequences in Iran: an Application of Fuzzy-Modeling

Abstract

During last decades, Iran's economy has been stricken by Dutch Disease. In order to apply appropriate remedial policies for dealing with this phenomenon, it should be explained by scientific principles and its impacts on macroeconomic variables are evaluated. In this regard, it is necessary to determine the ranking of proposed remedial policies. The objective of present study is to detect and classify main fields affected by Dutch Disease and propose remedial policies based on the comments of economists and experts. To achieve this purpose, a fuzzy decision-making approach is designed in three ranking models. In addition, the short-run, medium-term, and long-run scheduling procedures are considered as the key decision- making criterion. Results signify that the dominance degree of "refinement of policies of National Development Fund" is 3.79 dedicating that it is the first priority among the six alternatives. The next priorities are "refinement of government budget policies", "improving the monetary policies", "refinement of policies of foreign trade sector", "refinement the relative price mechanism", and "refinement the policies of exchange rate" whose dominance degrees are respectively 3.508, 3.283, 1.735, 1.582 and 1.096. It is concluded that among remedial policies, "refinement of policies of National Development Fund" and "refinement of government budget policies" are found as the most preferable policies in the viewpoints of economists. Obviously, implement of these remedial policies can work for treatment of the disease. Moreover, the results of sensitivity analysis evince that all three models proposed in this research are constant and not affected by threshold values.