Iranian Economic Review
Volume:26 Issue: 67, Spring 2022

This study examined the dynamics of monetary policy and output growth in the Economic Community of West African States between 1980(Q1) and 2019(Q4). Time-series data spanning was utilized from 1980 (Q1) to 2019 (Q4), which was sourced from the World Bank and International Monetary Fund databases. This study uses the panel co-integration ARDL approach and panel vector autoregressive model estimation techniques. The pooled data results for ECOWAS countries confirmed that all interest variables were stationary after the first difference. The study's findings revealed a long-run relationship between output growth and monetary policy variables in Anglophone and Francophone ECOWAS countries. The results of both the long-run and short-run models of the ARDL regression estimate showed that interest rate and money supply growth were significant determinants of output growth in ECOWAS Countries. In contrast, the exchange rate is an insignificant determinant of output growth in ECOWAS countries. In addition, the study observed that the exchange rate has a negative and significant impact on output growth in Anglophone ECOWAS countries, while on the contrary exchange rate has a positive and significant effect on output growth in Francophone ECOWAS countries. Based on the findings of this study, there is a need for ECOWAS countries to work towards achieving an effective real exchange rate that will help to increase output growth.

with spectral analysis until 2050. Persian Gulf Economies being oil-driven, the special relationship between oil price and Persian Gulf Economies is unfolded with Multiscale Principal Component Analysis and integrated into the forecasts. The GDPs are decomposed into clearer signals called approximations and details in the one-dimensional discrete wavelet analysis framework. The simplified signals are recomposed after the Burg extension. Spectral analysis forecasts are all bullish for the eight economies of the Persian Gulf. Two thousand fifty spectral analysis projections rank Iraq first with an annual growth rate of +2.37% and Iran second with +2.19%. The two laggers among the 2050 spectral analysis projections are Saudi Arabia (+1.37%) and Kuwait (-0.04%). Two thousand twenty-four spectral analysis projections rank Iran first with an annual growth rate compounded of +4.12% and Iraq second with +3.79%. In comparison, IMF projections rank Iraq first (+3.17%) and United Arab Emirates (+2.92%). The two laggers among the 2024 spectral analysis projections are Qatar (0.22%) and Kuwait (-3.74%), while the two laggers among the 2024 IMF projections are Saudi Arabia (+2.15%) and Iran (-0.30%). In 2020, the COVID-19 pandemic brutally hurt Persian Gulf Economies following a collapse in the global demand for oil and an oversupplied industry. The individual effect on these economies will depend on the response brought by their respective governments.

The world economy is moving more and more towards globalization, and there has been significant growth in international trade, especially in the last two decades. Increasing economic integration in the world has led to the importance of environmental issues. The present study seeks to investigate the effects of globalization on the quality of the environment along with the variables of GDP, energy consumption, and industrialization index, considering the structural break in Iran between 1971 and 2017. The Lee-Strazicich test investigated the stationarity of the variables, and co-integration between variables with multiple intervals was measured using the Maki test. Using the FMOLS approach, it was found that globalization, energy consumption, and industrialization have positive and significant effects on environmental pollution (CO2 emission). The relationship between GDP and the squared GDP with CO2 emissions is negative and positive, respectively; the environmental Kuznets curve (EKC) hypothesis is not confirmed in Iran and is U-shaped. Also, according to the results of the Toda-Yamamoto causality test, there is a one-way causality from energy consumption to CO2 emissions, globalization, and GDP. In addition, a one-way cause was observed from GDP and industrialization to globalization and from CO2 emissions to GDP.

Experiences often by many countries slowing economic growth as a result of central government-centered funding policies. The concern about slowing economic growth is motivating the need for a decentralized approach to development funding to foster economic growth. The research aims to describe the policy influence of decentralizing funding sources between central and local governments to boost economic growth in East Java. This research method uses an explanation design with a quantitative approach. Data panels are collected from 38 cities/counties from 2009 to 2018 years, in East Java, with analysis using regression technique with SPSS version 23. This study showed that the decentralization of funding sources could significantly increase local economic activities and affect the increase in regional economic growth. Increasing local economic activity can substantially increase economic growth. At the same time, local economic growth can significantly increase society's welfare in East Java. These findings remind the importance of the policy that decentralized funding will contribute positively to the growth of local economies. More importantly, if the local government regulates the sources of fiscal income and effective expenditure, decentralized funding will encourage the growth of the local economy, eventually improving the welfare of the people in East Java.

Decentralization is expected, theoretically, to be a route to efficient provision of the local public services. This efficient utilization of scarce resources is further expected to boost economic growth. Despite solid theoretical footings, the existing empirical literature presents mixed results for the presumed positive relationship between decentralization and economic growth. It is important to note here that the second-generation theories of fiscal federalism talk about the enabling environment for decentralization to yield positive results; talking explicitly, an enabling institutional setup is required. Therefore, the current study examines the complementarity between fiscal decentralization and institutions stimulating growth. A sumptuous cross-country panel data from 1990 to 2018 is used for analysis. Results suggest that fiscal decentralization and institutions both are instrumental in economic growth, and there is complementarity between the two. However, over-exposure of local representatives seems to divert their attention from service provision to countering opponents’ strategies.

The exchange rate and international oil prices are vital variables that indicate the impact of external economic developments, agreements, and relationships. Since in countries like Iran, most of the government's revenue comes from exchange earnings from the international markets by oil exports, the impact of two variables on the economy has a significant outcome. Also, it should be considered how fluctuations in the exchange rate and international oil prices can affect the policy and international relations. According to a global trade standpoint, it is believed that the exchange rate affects the economy through the changes in exports and imports commodities; therefore, expected the exchange rate will affect the price of traded products. Moreover, the impact of the oil price on the production of items changes the level of supply for activities and income of institutions through the changes in the production factors and intermediary imports price. The results show that rising exchange rates and oil prices increase government revenue from sales of production factors; with rising prices and more sensitivity to oil prices, the government faces budget surpluses. Also, when the government faces a surplus or deficit, as much as consumption, saving, and changes a payment, which results from the optimality of the model. In addition, it is more critical that Iran's economy use policies that uniform direct tax rate point change for selected institutions, which is more optimal because the budget is less unstable.

This paper aims to model the housing price behavior in the Iranian market using three stochastic differential equations: the Black-Scholes model, Merton model, and geometric Brownian motion with nonlinear GARCH. The data of this study include monthly observations on housing prices between 2009 and 2018. Also, to estimate the coefficients of equations, we used the maximum likelihood approach, and the drift and diffusion parameters were calculated. The findings suggest that the efficient-market hypothesis does not hold in the Iranian housing market since the sudden jump under systematic risks is indicative of an increase in inefficiencies in the housing market. In this paper, we also use the nonlinear GARCH (NGARCH) model based on the Merton model to investigate the impact of good and bad news and positive and negative shocks. According to the results of the NGARCH model, housing price is more affected by bad news and negative shocks. According to the estimated equations in the Iranian housing market and the maximum likelihood function, the geometric Brownian model with stochastic NGARCH-based fluctuations has more explanatory power than the Merton model and the geometric Brownian model with constant volatility.

This study investigated the occurrence of herding in the Iranian stock market and the effects of gold prices and currency exchange rates on this phenomenon. For this purpose, the rate at which herding occurs in the Tehran Stock Exchange was calculated and analyzed, after which stock price data were classified based on gold prices and currency exchange rates. Herding under different exchange rates and gold price returns was also examined. Results showed that herding in the stock market was significant at the 1% level during sharp changes in gold and currency prices.

Principal-agent model is one of the most practical models in game theory. This model is used when a person or firm assigns a given work or activity to another person by drawing up a contract. The information of parties might be symmetric or asymmetric. In each case, the performance of the principal-agent model is different. Profit-sharing contracts are essential funding tools in Islamic banking. In profit-sharing contracts, depending on the type of contract the bank concludes with the customer, a separate profit division is determined in the contract. In general, as in the case of the principal-agent model, performing an economic activity is left to the customer. This paper provides an optimal model for profit-sharing contracts based on a principal-agent game theory model under symmetric and asymmetric information and answers these two questions: First, what are the optimal conditions for profit-sharing contracts with symmetric and asymmetric information? Second, does an ideal Islamic society with asymmetric information transform into the one with symmetric information, and does this transformation lead to the elimination of complexity and decrease bank’s costs related to the profit-sharing contract? Two hypotheses have been stated to answer the above questions. The first hypothesis is optimal conditions for these contracts, which will be realized by using the achievements of the principal-agent model for profit-sharing contracts. The second hypothesis is that in an ideal society that respects Islamic and Sharia law, completely asymmetric information changes into symmetric one, complexities of the profit-sharing model are eliminated, and bank costs decrease.

The principles of the Islamic moral economy encourage actual economic activity and an asset-driven financing model. Accordingly, the study examines the dynamic association between Islamic stocks and actual economic activity in an emerging Islamic capital market. The study employs various robust time series methods to unveil the relationship between Islamic stocks and real economic activity. Moreover, in the presence of other well-known predictors of economic activity like conventional stock index, interest rate, and exchange rate, the study finds a bidirectional causal relationship between the Islamic Shariah-compliant stock index and real economic activity on Pakistan Stock Exchange (PSX). The study's findings reinforce the notion that the development of the Islamic capital market leads to an augmented level of real economic activity.

This article discusses the sustainability of Islamic CSR programs by assessing the satisfaction and quality of life. A series of semi-structured interviews were conducted with the beneficiaries of the CSR programs through the platform established by the bank, Bank Islam Malaysia Berhad, which is known as the Sadaqa House. Three key informants or key informants had been selected who represented their institutions and received assistance from the CSR programs. The data interviews were analyzed using the content analysis method. Findings showed that Sadaqa House is a platform that manages the CSR programs and has improved the quality of life and sustainability. This study is constrained by a small sample of key informants; however, the saturation of information or data is achieved as per the objectives of the study. Moreover, the selected key informants were relevant and appropriate for this study and could provide meaningful insights and achieve the purposes. This study contributes to a better understanding of the impact of CSR programs provided by financial institutions and the sustainability of such programs toward the beneficiaries. The study brings a perspective of the emerging market in the context of CSR. The experience of this bank can be used as a reference for best practices to be emulated by others.

The present study aims to investigate the role of ICT in reducing the effect of information asymmetry on financial development. The research's data associated with the selected countries of MENA during the timeframe of 2004-2015 are extracted from the official sources. Then, the research model is evaluated in the short- and long-term using the dynamic generalized method of moments and FMOLS, respectively. First, the results show information asymmetries negatively affect financial development. Second, ICT reduces but cannot eliminate the negative effect of information asymmetry on financial development. Third, the threshold effect of ICT on the information asymmetry and thus on financial development was within the minimum and maximum ICT indices. Due to the role of ICT in reducing the information asymmetry in the financial system of the examined countries, the policy proposal of this paper is to expand the various areas of access, benefit, and use of ICT in the financial sector.

Value for money assessment is used in Iran to select appropriate projects for partnership with the private sector by public-private partnership contracts. However, this method merely focuses on the direct effects on the project's level and ignores the economic and social impacts and indirect national and regional impacts. This method also is limited to selecting discount rates and tax position adjustments. It ignores both the benefits users receive from increasing the quality of services through public-private partnerships and the project's financing methods. So ignoring these problems can lead to significant errors in assessments. Therefore, the present paper aims to use a complementary approach to make decisions about investing by public-private partnership method in one of the country's infrastructures of water resources development. In this regard, the effect of building, financing, and operation of the desalination project and water transfer from the Persian Gulf to industry and mine sectors in the southeastern provinces of the country by a public-private partnership model and using the recursive dynamic FCGE model to Iran's economic growth simulate and compare it to the traditional procurement model. Based on the results, it has no economic justification if the project is financed in the traditional procurement model (through increasing tax revenues) and financed through public-private partnerships (through the capital market) without increasing the productivity rate. In other words, this project is economically justifiable only if implemented by a public-private partnership contract and increases productivity by at least 0.01% during the operation period.

The tourism industry is a significant factor in developing countries economies. Developed and developing economies have witnessed growth in the tourism industry in the last two decades. The tourism industry has many advantages for a country, including increased employment opportunities, tax revenues, income earnings, and foreign exchange reserves; thus, it has become an important sector for economic development worldwide. The present paper aims to apply the Wavelet coherence (WC) method to study the effects of world economic policy uncertainties (WEPU) and geopolitical risks (GPR) on the tourist arrivals in Malaysia from 2000M1 to 2019M7. The obtained results show the stronger coherency of GPR compared to that of EPU and also indicate that GPR has long-run implications. In contrast, EPU has short-run influences on tourist arrivals. Therefore, the government must take necessary actions and measures to ensure international harmony, national security, and public protection against such unpleasant events.