فهرست مطالب

Iranian Economic Review - Volume:26 Issue: 66, Winter 2022

Iranian Economic Review
Volume:26 Issue: 66, Winter 2022

  • تاریخ انتشار: 1401/02/06
  • تعداد عناوین: 14
  • Abbas Khandan * Pages 1-18

    The Government in Iran plays a substantial role in the economy through financial interactions extended to various fields and many organizations. In recent years, investigation of such economic interactions indicates a considerable government debt for 2016, estimated at around 45% of GDP or two times of public budget. Given that Iran experiences tough sanctions and its oil export is restricted, many studies and experts assert that the government's income will decrease and its debt will increase even further. For creditors, this means that they are likely to face difficulties to get their money back and must compete with each other for that. The fierce competition among the government's creditors is quite understandable. The budget dedicated to paying off debts to private and public entities is only a tiny fraction of their demands. This paper tries to model the creditors' preferences using different asset allocation methods in bankruptcy games and finds a solution that may be consented. Results show that the Shapley Value dividing rule has the highest chance to be selected as social selection. Using this method, of the 450 thousand billion Rials in the public budget allocated to pay off public institutions and organizations (including private banks), the Social Security Organization (SSO) and government banks receive 137 thousand billion Rials (16.1% and 24.2% of their demands, respectively), private banks and credit institutions receive 127 thousand billion Rials (31%), public contractors receive 35 thousand billion Rials (26.3%). Other public entities receive 13 thousand billion Rials (28.3%) for their demands.

    Keywords: Bankruptcy Games, Public Debts, Social Choice
  • Solomon Abayomi Olakojo *, Emmanuel Ogunkola Pages 19-44

    The renewed isolationist rhetoric among countries in the global north has implications for international trade integration. This study investigated the effect of isolationist measures on regional trade integration in Africa. The export supply function was estimated with a dynamic Markov switching model utilizing data between January 2005 and December 2018 for five African countries (Nigeria, Kenya, South Africa, Uganda, and Morocco). The results showed that the current isolationist policies have made Kenya and Uganda conduct more of intra-African trade; Uganda and South Africa to be more integrated into their regional economic trade blocs; and have generated a significant shift in the trade direction of Nigeria, South Africa, and Morocco in favor of non-traditional extra-African trade directions. The key drivers of intra-Africa trade integration are industrial production and relative prices. Hence, African countries need to deepen and synchronize industrial policies, target low inflation and reform their equity markets to foster higher industrial performance required for deeper intra-African trade integration.

    Keywords: Isolationist Policies, Intra-African Trade Integration, Export Supply Function, Extra-African Trade, Markov Switching Model
  • Ibrahim Adekunle *, Isiaq Oseni, Ayomide Ogunade Pages 45-60

    In spite of the massive revenue emanating from oil wealth, the successive government of Nigeria failed to give its citizenry the dividend of democracy owing in large part to their inability to establish a market clearing situation because of inadequate linkage between the sources and the markets (transport infrastructures). An Inquiry into the cause and potential solutions to the problems of transport infrastructure development in Nigeria informed the need to regress indices of fiscal vulnerability on the indicator of transport infrastructure development in Nigeria from 1986 through 2017 using the dynamic ordinary least squares regression technique. Results show that high-level fiscal vulnerability deters optimal government expenditure on transport infrastructure development in Nigeria. Based on the findings of the study, it is recommended that government should do more to block all leakages of fiscal revenues and subsequently ensure that more allocation is channeled into transporting infrastructure development because of its forward and backward linkages.

    Keywords: Fiscal Vulnerability, Transport Infrastructure Development, Nigeria
  • Anthonia T. Odeleye *, Darlington Akam Pages 61-77

    The paper re-examines the money demand function in sub-regions of Sub-Saharan Africa and its sub-regions with annual time series spanning between 1980 and 2017. Panel homogeneous Autoregressive Distributed Lag, panel co-integration tests, and Dumitrescu and Hurlin panel causality test were employed for analysis. The empirical results showed a co-integrating relation between money demand and its determinants in SSA and its sub-regions. The results also indicated divergence in terms of short-run determinants, long-run determinants, and error correction due to shocks across the sub-regions. The causality test revealed a bi-causal relationship between money demand and its determinants in SSA economies. However, there was divergence in the causality results across the sub-regions. We conclude that price level is the major driver of money demand in Sub-Saharan Africa. The paper, therefore, recommends that governments in SSA economies should employ policies that can enhance price stabilization, which will consequently lead to money demand stability in the whole region.

    Keywords: Price stability, Autoregressive Distributed Lag, Co-integration, Divergence
  • Mahdieh Rezagholizadeh *, C.-Y. Cynthia Lin Lawell, Kazem Yavari Pages 79-107

    This paper examines the factors that affect stock returns in the Tehran Stock Exchange, the largest stock exchange in Iran.  In particular, we analyze the conditional relationship between risk and return in Iran by estimating the relationship between various sources of risk - market risk, oil price risk, exchange rate risk, gold price risk, inflation risk, skewness, and kurtosis - and the stock return in the Tehran Stock Exchange over the period March 2005 to March 2019. The methodology used in this paper is a multi-factor model that allows the impact of the risk factors to have asymmetric effects depending on whether returns for the respective risk factor are increasing or decreasing. We analyze the risk-return relationship for four groups of industries: the top ten industries by market cap, the five largest energy-consuming industries, the four major export industries, and the four major import industries. We find significant conditional relationships between risk and return for all the risk factors considered.

    Keywords: Risk, Return, Multifactor Conditional Model, Iran
  • Mustafa Kılı&Ccedil, Mehmet Çanakcı * Pages 109-119

    Since late 19th century social sciences have been stuck within the deterministic views of natural sciences. Getting further away from the real nature of human being, social sciences have been explaining the imaginary world of the scientists. In economics, homo economicus plays the leading role in the imaginary world of economists. However, recently this dream world of economists has been greatly distressed with the development of behavioral economics. Behavioral economics has opened the door for real world investigations not only for economics but also for other social science disciplines. So today is the right time to talk about the reality of religion and economics. In fact, for defending an idea, generally the righteousness of the time is more important than the righteousness of the idea itself. This study is prepared in order to make emphasis on the complementary relationship between religion and science in broad terms but specifically between Islam and economics. With a historical point of view, this study bases the main idea on three hypotheses from three books. First book is Frank M. Turner’s European Intellectual History. Second hypothesis is depended on the Tomas Sedlacek’s Economics of Good and Evil. Last but not least book is the Fukuyama’s End of History and the Last Man. At the final part of the study, based on these three hypotheses, there will be suggested Islamic solutions for behavioral problems in economics.

    Keywords: Islamic economy, Homo Economicus, behavioral economics, Tyhmos, Neoclassical
  • Muhammad Faheem *, Mohamed Azali, Lee Chin, Nur Syazwani Mazlan Pages 121-132

    This study deals with the question of whether the inflow of migrant remittances causes Dutch Disease or not in India. For this purpose, the study employs the Autoregressive Distributed Lag Model (ARDL) to examine the influence of migrant remittances on the real effective exchange rate spanning the period from 1975 to 2018. In the long run, the study finds a positive relationship between migrants’ remittances and the real effective exchange rate, meaning that evidence of Dutch Disease risk in India. The study also checks the moderating effect of inflation on remittances and real effective exchange rate relationship and finds a negative effect. The study recommends that the government of India would implement and design the policies for the diversification of remittances flow toward priority areas of investment.

    Keywords: Migrant Remittances, Dutch Disease, ARDL, India
  • Vahid Dehbashi, Teymour Mohammadi *, Javid Bahrami, Abbas Shakeri Pages 133-146

    Volatility spillovers among financial markets suggest some sort of information transmission between these markets. The present article uses VAR-BEKK-GARCH approach to investigate volatility spillovers among financial markets in Iran, including stock, foreign exchange and gold markets pre and post JCPOA. To compare volatility spillover among financial markets, the data analyzed were associated with two periods, one pre-JCPOA, i.e. 25 March 2009 to 13 July 2015, and the other post-JCPOA, i.e. 15 July 2015 to 18 July 2018. Moreover, the impulse-response functions were calculated by including the asymmetric volatility spillover of error terms in MGARCH-type equations. Comparing the results obtained from estimating the model confirmed two-way volatility spillover between gold and stock markets in both of the periods, two-way volatility spillover between foreign exchange and stock markets, one-way volatility spillover from gold to foreign exchange markets in the per-JCPOA period, two-way spillover between foreign exchange and gold markets and one-way spillover from stock to foreign exchange markets in the post-JCPOA period. In addition, the effect of volatility spillover from stock to foreign exchange markets was negative in the per-JCPOA period and positive in the post-JCPOA period, and volatility spillovers between financial markets significantly decreased in post JCPOA period. The results of impulse-response functions also confirmed a reduction in the transmission of uncertainty among financial markets in Iran in the post-JCPOA period.

    Keywords: Volatility Spillover, Financial markets, VAR-BEKK-GARCH Approach, JCPOA
  • Reza Najarzadeh *, Alireza Keikha, Hassan Heidari Pages 147-159

    This study aims to investigate poverty risk and inequality decomposition based on the education level of Iranian urban household heads in 2017. A logistic regression model is estimated with the poverty status of households as a dependent variable, a set of control variables (gender and age), and the education level of household heads as explanatory variables. We also use the Gini decomposition as appropriate inequality decomposition for selected provinces. These provinces are categorized based on whether they are deprived or non-deprived provinces using the Council of Ministers guidelines. The findings show that the poverty risk of families in both deprived and non-deprived provinces as well as the country as a whole decrease when the education level of the household head increases. The marginal effect of the first level of education is higher than other levels. Therefore, one can conclude that Iran is more similar to less developed countries. We also show that being a male household head reduces the poverty risk of families in Iran, but the gender of household heads has no significant effect in the selected provinces. In addition, the poverty risk in higher age groups is lower than that of other age groups. Based on the Gini decomposition reports, the highest level of inequality is observed in Sistan and Baloochestan province which suffers from the highest level of unemployment and illiteracy rates in Iran. Finally, inequality decomposition confirms the crucial role of education in explaining inequality.

    Keywords: Poverty Risk, Education, inequality decomposition, Logistic regression, Iran
  • Dayo Benedict Olanipekun * Pages 161-181

    This study empirically investigated remittances’ short-run and long-run effects on actual exchange rates. Further, it examined the impact of remittances on resource movement from the tradable to the nontradable sector in the CFA franc and non-CFA zones of sub-Saharan Africa (SSA). A panel-based, Pooled Mean Group estimation technique was adopted to estimate the data collected from 1981 to 2018 for 26 SSA countries which comprise 15 non-CFA and 11 CFA countries. Both aggregate (SSA) and disaggregated (CFA franc and non-CFA) analyses were conducted. The data utilized were collected from the World Bank’s World Development Indicator and International Monetary Fund’s International Financial Statistics database. Evidence from the results indicated that remittances inflow led to real exchange rate appreciation in the CFA zone. However, the effect of remittances on the real exchange rate in the non-CFA zone is not statistically significant. Moreover, while remittances caused a shift of resources from tradable to nontradable sector in the CFA zone, in the long run, there is no substantial evidence that remittances would lead to resource movement from tradable to nontradable sector in the non-CFA zone. Thus, in the CFA zone, effective policies need to be implemented to channel remittances towards investment in agriculture and industry (tradable sector) to reduce the negative impact of remittances in the industry.

    Keywords: Remittances, Dutch Disease, CFA, Non-CFA, Pooled Mean Group
  • Davoud Mahmoudinia *, Leyla Borhani Pages 183-197

    The coincidence of banking and currency crises since the 1990s has attracted the attention of many economists to the causal relationship between them. The current paper aims to determine the potential indicators of banking and currency crises and their causality in the Iranian economy during 1980–2018. For this purpose, we first study the different developments in the Iranian economy over the last four decades. Then, two types of variables, including multi-categorical and dummy variables, are extracted from the exchange market pressure index (EMPI) and money market pressure index (MMPI). The empirical results found that the two crises could occur closely together in the same periods. According to the ordered logit and logit model, the results showed that the impact of the currency crises on banking crises was positive and statistically significant. Still, banking crises did not lead to currency crises when banking crises were peroxide as the dependent variable. In addition, the Granger causality test showed some one-way causality from EMPI to MMPI.

    Keywords: Banking Crises, Currency Crises, Logit Model, Iranian Economy
  • Younes Nademi *, Peter Winker Pages 199-214

    The purpose of this paper is to consider the relationship between inflation and government size in OPEC countries during the period 2000-2015. Estimation results from different linear panel models with quadratic form of government size and non-linear panel models including static and dynamic panel threshold models suggest that there is a non-linear relationship between government size and the inflation rate in these countries. The threshold value of government size is estimated as 17.76% for all the threshold panel models with different control variables. Below this threshold value, an increase in government size has a significant negative impact on the inflation rate. When government size grows larger, an increasing government size has a significant positive impact on the inflation rate. This paper suggests that it is possible to explain the contradictory evidence of previous studies by making use of a non-linear model.

    Keywords: Inflation, Government Size, Threshold Panel Models, OPEC Countries
  • Mostafa Mobini Dehkordi, Karim Azarbayjani *, Khadije Nasrollahi, Seyed Komeil Tayebi Pages 215-235

    Economists have always noticed the immigration of laborers since it can change the economy of countries. In the literature of international economics, labor force immigration is studied by the mobility of factors of production and trade. In this case, empirical studies have found substitutive and complementary relationships between the two, which necessitate consideration of other elements influencing this relationship. One of the phenomena that can affect both labor force immigration and bilateral trade is the countries' financial crises. Therefore, this study analyzes the parametric effect of bilateral trade and the nonparametric impact of economic crises on labor force immigration in the Middle East and OECD countries from 1995 to 2017. For this purpose, two indices of banking market pressure and debt market pressure have been used to study financial crises such as banking crises and sovereign debt crises, and the semi-parametric gravity model of immigration has been estimated by using random effects. The estimation results show a substitution relationship between bilateral trade and labor force immigration, and both types of mentioned financial crises have a nonparametric impact on immigration. So that the effect of these two types of economic crises on labor force immigration has been upward for some periods and downward for other periods. Moreover, these financial crises have reduced the labor force immigration among business partners. In other words, there has been a nonlinear relationship between the two financial crises.

    Keywords: Banking Financial Crises, Bilateral Trade, Labor Force Immigration, Semi-Parametric Analysis, Sovereign Debt Crises
  • Joshua Afolabi * Pages 237-254

    This study examined the impact of financial liberalization and trade openness as well as their interactive effects on the growth of the Nigerian economy using annual time-series data for the period, 1981 to 2018. The results of the Augmented Dickey-Fuller (ADF) unit root test show that all the variables are stationary at the first difference and the Johansen cointegration test results confirm the existence of a long-run relationship among the variables in the model. Two equations were specified and estimated using the dynamic ordinary least square (DOLS) estimation technique and the granger causality test was carried out. The results reveal that financial development, exchange rate, and interest rate spread have a significant influence on real GDP in Nigeria while trade openness, as well as its interaction with financial development, do not exert any significant impact on economic growth in Nigeria. Further, this study supports the demand-following and trade-led growth hypotheses. Hence, this study recommends the design and implementation of a policy framework geared towards enhancing the intermediation efforts and deposit mobilization of the financial sector that would instigate the integration of the sector with the various productive sectors of the Nigerian economy and that trade performance in the country to be improved through economic diversification so as to boost exports, raise the country competitiveness and increase her national output.

    Keywords: Financial Development, Trade openness, economic growth, Dynamic OLS, Nigeria