The Effect of Investment in Housing on Economic Growth in Iran: An application of the GMM time series approach

Investing in housing is one of the most common methods of investing in Iran. The housing and construction sector has a widespread relationship with other economic sectors. Housing annually attracts a large amount of liquidity in the country, so investing in this sector is more important in the process of growth. In this paper, first the relationship between investing in housing and economic growth is evaluated by the Granger causality test. The results of this test showed that there is a one-way causal relationship from investing in housing to economic growth. Then, using GMM method and time series data from 1981-2019, the impact of investing in housing on Iran's economic growth is studied. The results showed that investing in housing has a positive and significant effect on Iran's economic growth. The lag of variable “economic growth” has a positive effect on economic growth in later years. Also, other results indicate that human capital, capital stock, government expenditure index and industrialization index have positive and significant effects on Iran's economic growth. Based on the results, it can be suggested that the shortcomings and barriers to investment in the housing sector should be removed, and also incentives and facilities for investment in housing can be effective in increasing economic growth.