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The new theories available in the international trade emphasize on the synchronization of economic fluctuations arising from trade integration and multilateral trade flows among countries. This paper verifies this relationship among 56 Islamic countries classifying into the three major blocks: D8, GCC and ECO. The empirical results obtained by this research, through measuring different indexes, show a pronounced and significant relationship between trade integration and the synchronization of economic fluctuations among these countries during 1990-2005, in particular. Further more the result show that regional block arrangements play significant roles to integrate trade and synchronize business cycles in the OIC nations. In comparison, the highest synchronization is found among the D8 member countries.

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This paper studies the validity of Wagner law in selected OIC (Organization of Islamic Conference) member states by classifying them based on their income levels and degrees of corruption. For doing so, the Pesaran Cross-sectional Dependency (CD) test, cross-sectional augmented ADF (CADF) as well as Wasteland and Edgerton's panel co integration tests have been employed. To estimate the coefficients, the continuous-updated and fully modified (CUP-FM) estimator has been used. The results confirm validity of Wagner law in all economies, having different income levels and corruption degrees.

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The effect of government spending on private consumption, as the largest and the most stable component of aggregate demand always has been preoccupying many economists. In this article, using the elasticity of substitution concept, we investigate the substitutability of government spending for private consumption in 48 OIC countries. We use the Pesaran’s CD test for investigating the cross-section dependency in the data. Then the stationary of variables confirmed by IPS and CIPS tests and the regression equations estimate by CUP-FM estimator. According to the estimation results, the substitutability between government spending and household consumption was confirmed for OIC countries. In addition, the results of estimating tell that in case of countries with larger governments the degree of substitutability between government spending and private consumption is greater.

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The purpose of this study is to investigate the rationality of behavioral economics in mental accounting by studying laboratory economics. Undoubtedly, economic man, whose fundamental characteristic is rationality, is the starting point for economic analysis. In conventional economics, the premise of rationality is the cornerstone and the premise of all economic theories. However, critics of economic rationality argue that economic agents sometimes exhibit irrational behaviors that may be limited by mental capabilities. Behavioral economics, which is generally based on abstract preferences, addresses the general frameworks of subjective accounting. In this study, an economic experiment was designed by providing a laboratory environment and using thirty actors. Laboratory economics assesses behavioral assumptions and theories by means of controlled experiments. The results indicate that there is a significant relationship between the rationality of economic behavior and mental accounting. This study argues that it is not possible to provide a realistic analysis of individuals' financial behaviors only on the assumption of rationality and without considering other factors, particularly the behavioral constraints of decision makers. Given the limited number of studies of behavioral economics, the present study can help us to better understand financial behaviors of mental accounting origin.
 

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