Application of the GMM Method in Analyzing the Effect of Insurance Penetration Rate on GDP, The Case of Iran

Financial markets is one of the most important mechanisms to attract investment and efficient distribution of assets by transferring savings to investment.Given the importance of insurance in the country's economic activities, the effect of insurance industry on the GDP of Iran is calculated. Thus the insurance penetration rate and degree of trade openness on GDP in Iran during 1971-2013 were examined. The generalized model of Avram (2010) were used. Long-term equilibrium relationship between the variables of the model was confirmed by Johansen-Juselius tests. According to GMM, the results showed a positive effect of country's insurance penetration rate on the GDP of Iran.