State Space Models

All state space models are written and estimated in the R programming language. The models are available here with instructions and R procedures for manipulating the models here here.
Showing posts with label Iran. Show all posts
Showing posts with label Iran. Show all posts

Wednesday, March 11, 2026

Future Scenarios for Iran




In an Opinion piece for the NY Times How Does This End? Four Scenarios for What Comes Next With Iran, Bret Stephens argues that there are four likely future scenarios for the War in Iran: (1) Regime Change, (2) Regime Modification, (3) Both sides declare 
victory and (4) the Realistic Path, US seizes Kharg Island (see the video above which argues that the "Realistic Path" is a trap). These scenarios are all relatively short-term.

My interests are in more long-term Geopolitical Alignments that might benefit Iran. It seems that most of the World-System has abandoned Iran. Russia, China, and the EU are all sitting on the sidelines while the US and Israel continue an Air War. And, my simulations with the IR_LM model show that leaving Iran to "go it alone" (the Business-as-Usual or BAU model) produces the best future prospects (see the simulations here). The US and Israel seem intent on not letting the BAU Scenario go forward.

I asked ChatGPT about the Geopolitical Consequences of the current US-Israel-Iran War:


I can investigate the effects of a Global Oil Shock by using the WL203 Model.



The third component state variable (see Notes below) is dominated by Oil Prices. A large one standard deviation shock to the W3 component (an Oil Price Shock and associated effects: Wheat Prices, Oil Production and Ecological Footprint) produces the shock decomposition above. Overall growth in the World System (W1)  takes a negative shock that is never fully recovered. The same is true for the W2 state variable (an Environmental Controller); the negative shock is never recovered. Eventually, however, Oil Price Controller (W3) returns to the attractor path.


Notes

Saturday, February 7, 2026

What If Iran Dominated the Middle East? World-System (1960-2100)

 



Iran has currently reentered talks with the US over the Iranian nuclear program (here) after the US Bombed Iran's nuclear facilities on June 22, 2025. Iran and the US have had a long history of troubled and turbulent relations. Both the US and Israel seem to fear that one day a nuclear powered Iran could dominate the Middle East. 

The best model for the Middle East is to stabilize growth rates with no Geopolitical Alignments. 

Since I have models of the Iranian (IRLM), the Middle-Eastern Regional (MEA _BAU), the US (USL20) and the World (WL20) economies, I can predict different paths of overall growth under different Geopolitical Alignments.
  • The Best Model (in terms of growth) is the MEA BAU (Business as Usual) model, essentially the Middle East without a dominant regional hegemon.
  • The Next-Best Model is MEA driven by the Iranian Economy (IRL20)
  • The Also-Ran Models are MEA driven by the US Economy (USL20) and the World System (WL20) when compared to a Random Walk (RW, the Middle East struggling to find some Geopolitical Alignments that work).
The only one of these models that is stable (see the AIC Statistics below) is MEA linked to the World System (WL20), but that  model peaks after 2020 and then declines. In other words, stability for the Middle East would involve growth-and-collapse rather than a steady state (growth rates of the BAU model could easily be modified to produce a steady state, see the MEA_L20 code).

Notice in the MEA_L20 code, stabilizing the system is not enough to prevent collapse. Growth rate of the Malthusian Factor, MEA2= (N-CO2-EG-Q), must be reduced beyond simply stabilizing the system. 


A simple summary of the MEA Measurement Model above is that growth is controlled by a Malthusian factor, MEA2 = (N-CO2-EG-Q), and Energy Use, MEA3 = (Q-E). The interactions between the Control Components and Growth (in the System Matrix):

are small. You could also experiment with strengthening feedback effects by modifying the off-diagonal elements of F.

For the future, ChatGPT reports:
 





Notes

For more of my posts on Iran, see the Blog Roll. For more information about data sources and about how the State Space Dynamic Component Models were constructed, see the Boiler Plate.

IR Measurement Model


The IR Measurement Model has three components: IR1 = (Growth), IR2 = (0.9091 LU - 0.335 KOF) and IR3 = (0.827 KOF - 0.3878 LU - 0.258 EF - 0.217 EG) where LU = Unemployment, KOF = Globalization, EF = Ecological Footprint. Notice the low weightings on HDI, the Human Development Index.

MEA Measurement Model


The MEA Measurement Model has three components that explain 99% of the variation in the indicators: MEA1 = (Overall Growth), MEA2 = (0.8746 LU - 0.361 EG - 0.2320 CO2), MEA3 = (0.708 Q - 0.604 EG) where LU = Unemployment, EG = Energy use, CO2 = Emissions and Q = GDP. Briefly, Growth is controlled by an Unemployment-Energy use controller and a GDP-Energy use controller.


IR_MEA Model


The MEA1 model is unstable.

MEA BAU Model

The MEA L20 System Matrix has three unstable diagonal coefficients (greater than 1.0).

IR_MEA AIC Statistics


The IR_MEA models (RW, BAU, World, US and IRL20) are all very close together with the RW actually being best.




Wednesday, July 9, 2025

World-System (1950-2000+) Iranian Globalization and Unemployment

 




The IR2 component (Unemployment and Globalization) is the second most important state variable in the IR_LM model and explains about 12% of the variation in the indicators. Unlike the IR3 (Environmental-Globalization feedback controller), IR2 is not a feedback controller but rather a historical component. The White Revolution and the  Foreign Policy of the Kennedy Administration put a high premium on Modernization and Globalization which rapidly brought population into the cities without immediate job availability (see the video on The Iranian Revolution).




The result was very high levels of Unemployment (a peak of almost 15% in the mid-1980s--see the graphic above). Notice that Globalization peaked in the mid-1970s (first graphic above) while Unemployment peaked about a decade later. 

The two graphics above show the attractor path (dashed red line) for both  Globalization and Unemployment and show that each was above sustainable levels until the early 1990's. The IR2 historical component shows why Islamic Fundamentalism organized wide-spread discontent in Iranian cities before the Iranian Revolution.


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 second state variable, IR2, describes  Unemployment and Globalization, (IR2 = 0.9091 SL.UEM.TOTL.ZS + 0.335 KOF) and the third state variable, IR3, is an environmental-globalization feedback controller, (IR3 = 0.827 KOF - 0.3878 SL.UEM.TOTL.ZS - 0.258 EF - 0.217 EG.USE.COM.KT.OE), for unemployment, ecological footprint and energy use.

Further reading:

Blog Roll:

Sunday, June 22, 2025

World-System (2000-2150) Seven Futures for Iran


The Trump II Administration in the US has just attacked Iran and claims to have seriously damaged Iran's Nuclear Sites (here). Iran claims it will retaliate, but the future after the unprecedented attack using B2 Stealth Bombers and Bunker Buster Bombs remains unclear both for Iran, the US and Israel (who started the attacks on Iran). The future is unknowable and there is a lot of current speculation. I can use the IR_LM (Iran, Late Modern) model to project seven possible future scenarios for Iran (graphic above).

The Business-as-Usual (BAU) model is clearly the best and it forecasts unending exponential growth for the Iranian Economic System. The worst scenario is Geopolitical Alignment with China (CN) which leads to collapse. The scenario for alignment with Russia (RU), (light-blue dashed line) is quite cyclical and unstable. Alignment with the US produces stable growth out to 2100. The World System (W) and the EU Alignment models are not much better than a Random Walk (RW).

These seven scenarios suggest that Iran would prefer to be left alone to pursue its own future, but that seems unlikely to happen. Geopolitical Alignment with the US  would also produce a desirable future, but that also seems unlikely to happen. Russia (RU) might be attractive in the very short run but that alignment will prove to be unstable. This leaves Iran with no desirable futures within the IR_LM BAU model.

You can experiment yourself with the IR_LM BAU model here. The period prior to the Iranian Revolution of 1979 sowed possibilities of alignment with the West, but after the Revolution the economy was converted into strong central planning aimed at Autarky (see the Economic History of Iran). In these circumstances, the IR_LM BAU model could be stabilized at any time by reducing growth rates (a counterfactual you can run here). Notice in the IR_LM BAU Model that the feedback controllers are dominated by Globalization, Unemployment, Ecological Footprint and Energy Use.

ChatGPT reports the following:


For more information about how the statistical models were constructed and estimated see the Boiler Plate.

The Axis of Evil


Further reading:

Blog Roll: