The editor-in-chief of the scientific-research Quarterly Journal of Urban Economics and Management said
The continuity of stagnation and cost decrease in housing market
IUESA: Buying Iranian goods, particularly automobile, is a policy started by the government to support domestic producers, decrease inflation, and implement anti-recession policies recently, but the manner and positive or negative consequences, buyers’ loss or profit, the effectiveness of this measure, and possible application of this policy in housing sector were proposed by an interview with Dr. Sadeqi Shahedani, the editor-in-chief of the scientific-research Quarterly Journal of Urban Economics and Management.
What were the positive effects of recent measure done by the government on automobile industry?
Seemingly, there were about 51 thousand unsold automobiles in warehouses of carmakers. A credible threat of bankruptcy was proposed with implementing not purchasing Iranian car campaign by people since lack of demand can be converted to crisis. Therefore, the government tried to boost demand and help Iranian goods with specific stimulating policy to reduce inventories and perhaps to create better conditions for future productions.
Are automakers to be considered in this type of support?
The government tried to reduce inventories and avoid automakers’ loss. So, there is no policy for future products since it is believed that if the warehouses automakers reach an optimal level, they can overcome problems in future.
May inflation and secondary problems occur due to decline in state funds to pay for these facilities?
Perhaps more than two thousand 500 billion Tomans of central bank and other banks is intended to buy Iranian car. This leads to pressure on the central bank and it creates inflationary burden. Past experience has shown that the pressure on the central bank every time could raise inflation to be appeared again. Another point is that with the arrival of 110 thousand cars to the country’s road system that most requests are related to major cities, traffic burden should be expected to be increased. So this last action of the government could also trigger such adversity and environmental crises caused by air pollution increases.
Why officials with knowledge of inflation after the implementation of this policy, are still believed to be operating out of the package?
I think this kind of policy was imposed to the Central Bank because the bank itself did not want to go to under such pressures, but sometimes there are certain interests that the government recognizes and they are binding. So there was explanation in the government in which the central bank was forced to accept it. Demand stimulated by the people should have been answered and automakers to be exited from critical condition and on the other hand burden of inflation will have to be answered not to impact on the society. If automakers fail to deliver the promised 110 thousand cars, this market will experience new changes and developments and may create imbalance in other markets.
Is it possible that automotive experience may also be replicated in the housing sector to help builders?
If the government and the central bank had more resources, building industry might exit from recession with similar policy. The difference between car and building is that the government has to put more pressure on the central bank to provide loans and other support to exit the recession in the housing market, but due to current conditions, the government seems unlikely to provide such credit. If we want to provide such resources for building industry, 10 times of the current figure for the vehicle should be considered. Providing the figures is impossible for the central bank. If expansionary policy is not applied by the government, downturn will continue in housing market and even the costs may be reduced more.
