Financial Repression and Agricultural Growth: The Case of Islamic Republic of Iran (1962-2007)

There have been few studies working on effects of financial repression policies on Iran’s economic growth. Considering the huge share of agricultural sector, we have been trying to fill this gap by the help of time series data from 1962 to 2007 on agricultural GDP, unproductive government expenditure, human capital, industrial price index, political instability, and financial repression measures. Results show that controlling the bank reserve requirement ratio as a proxy for financial repression has negative effect on economic growth of agricultural sector. This indicates that reducing controls on this parameter will help government to achieve higher rate of growth.