Iranian Economic Review
Volume:26 Issue: 68, Summer 2022

Pakistan has been experiencing a decrease in population growth since the early 1990s, which has led to an increasing ratio of the working-age population, known as the demographic dividend. The demographic dividend may lead to higher savings and investment, which spurs economic growth. Given this postulation, the study is the first of its kind to empirically analyze the impact of demographic variables on economic growth through physical capital for Pakistan from 1960 to 2018. In this regard, the demographic change is captured by taking four alternate measures: population growth, young-age dependency ratio, old-age dependency ratio, and working-age population ratio. In the first step, the direct impact of demographic changes on physical capital is estimated to examine the channel effect. Later, the effect of demographically-induced capital stock is estimated on economic growth. Using the FMOLS technique, the study concludes that the total negative impact is highest in the case of old-age dependency, which means that higher old-age dependency is the most threatening demographic change for economic growth. The least harmful demographic change is the young age dependency. Moreover, the empirical findings highlight the importance of capital stock as the mediating channel in the demographic change and economic growth relationship. The study recommends effective long-term policies to increase youth employment and enhance savings to maximize the benefits of the demographic dividend.

This study aims to find out the profit efficiency and determinants of profit efficiency in Boro rice cultivation in Manikganj and Dhaka districts of Bangladesh. It also focuses on technology adoption and the effect of technology adoption on the profit efficiency of Boro rice cultivation in Bangladesh. Face-to-face interviews with one set of structured questions were used to get the information from 300 households that grew Boro rice. The findings showed that the profit efficiency of the farmer varied between 23% and 97%, with a mean of 76%, which implies that 24% of the profit is lost due to a combination of technical and allocative inefficiencies in Boro rice cultivation in the study area. The inefficiency model revealed that the education level of the farmer, farm size, variety of seed, and training& extension service influence the profit inefficiency significantly. The study also explained that the level of technology adoption index affects profit efficiency. The technology adoption in Boro rice cultivation is influenced by the education level of the farmer, farm size, and farm capital.

Over the years, African countries have implemented various economic liberalization reforms. The impact of such policy reforms on government size has remained a contentious issue in the literature. Thus, this study examined the relationship between openness and government size in Sub-Saharan African countries. The study covered twenty-one African countries over the period 2001 to 2019. Specifically, the study examined the validity of the compensation and efficiency hypotheses concerning Sub-Saharan African countries. The study's findings did not support the existence of both the compensation and the efficiency hypotheses. Also, it was observed that financial openness slightly influenced the relationship between trade openness and government size in Sub-Saharan African countries. Thus, the study concludes that the compensated and the efficiency hypotheses do not hold for Sub-Saharan African countries.

This study analyzes Village Fund as a government policy concerning impoverished communities and cooperatives as a financial institution producing capital in East Java Province. The study used the district and city panel data of East Java Province in 2010-2018. It utilized panel data regression with the Fixed Effect Model (FEM). Estimation results show that village funds and the number of cooperatives have a negative impact on the number of poor people. This means that the higher the Village Fund and the number of cooperatives in districts and cities of East Java Province, the decreased the number of poor people in the region. Therefore, those instruments can be used to support the program of the local government in reducing the poverty.

Interaction of macro prudential policy and monetary policy depends on the relation of objectives. Central bank authorities focus on price stability but may not concern with financial stability. Hence, the variables that influenced on financial markets are various and are determined to on risk management perspectives. This paper survey the interaction of monetary policy and macro prudential policy by focusing capital requirement. The aim of this paper are increasing convergence between polices by transitions mechanism. This paper use the dynamic unbalanced panel system generalized method of moment (SYS-GMM) for estimating the interaction of monetary and macro prudential policies. This system considers preference of central bank as proxy of goal’s monetary policy. The data includes OIC countries banking system over the period 2003-2017.The sample of 52 OIC countries (Organization of Islamic Cooperation). According to the results, the coefficient of this cross-product is significantly positive that indicating that conservatism of central bank and macro prudential policy instrument, capital adequacy, increase the effect of macro prudential policy on banking lending. The results show that the conservatism of central bank is an important indicator for implementing macro prudential supervision in OIC countries.

This paper aims at investigating the effectiveness of monetary policy and the role of money in enhancing the economic growth and achieving the economic stability in Jordan. Therefore, this study uses quarterly time-series data for Jordan over the period 1992Q1 - 2019Q4 to estimate a reduced form model. The study variables are stationary at the first difference as indicated by Augmented Dickey-Fuller and Phillips-Perron unit root tests. Granger Causality test also revealed the existence of unidirectional causality running from money to the real output, and bidirectional causality between the real output and prices level. Johansen cointegration test clarified the existence of only one cointegrating relationship in the long-run. Moreover, applying Fully Modified OLS and Vector Error Correction models for estimation emphasized the significant positive short and long-run impact of money on the real GDP in Jordan, rejecting the hypothesis of neutrality of money in the long-run. The adjustment coefficient is 42% indicating that 42% of the previous quarter deviation from long-run equilibrium is corrected in the current quarter. Based on these outcomes the study recommends to improve the management of monetary authority, and focus on developing the domestic money and capital markets and their instruments, in order to sustain and strengthen the role of monetary policy in the Jordanian economy. It is also recommended that the fiscal and monetary policies should be designed to be complementary to each other rather than rivals.

When External net assets change, a country's money supply and the central bank's debt will change. The exchange rate is much more critical in countries like Iran because a significant portion of the government's revenue comes from the External exchange of natural resources. So, the exchange rate directly influences the government's financial situation, revenues, and costs. As External debt is one of the main financing resources of the budget deficit, thus how it will be spent can positively or negatively affect the exchange rate fluctuations. This research tried to study the effect of External debt on the exchange rate by using a monetary approach to the exchange rate and used time series data for the 1981–2017 period. In addition, due to the nonlinear relationship between the variables based on the LR and BDS test, nonlinear models were used to estimate. The results show that External debt and money supply have positive and significant effects on the exchange rate. So, monetary policy can derivate the exchange rate from its long-run trend. In contrast, the difference between domestic and external production has a negative and significant effect on the exchange rate.

This article aims to analyze the factors that can influence the behavior of Muslim employees to contribute to the endowment of money through salary deductions. The research method used is quantitative. The sampling technique uses a purposive sampling technique. The number of respondents was 156. This study showed that the product knowledge variable had no significant direct effect on the intention of contributing to the endowment of money through salary deductions. Islamic Religiosity is having a substantial impact on the plan to add to the donation of money through salary deductions due to the amount of t-test 2.2303> 1.96. Consumer Attitude significantly affects the intention to contribute to the money endowment through salary deductions because the t-test value is 2.7174> 1.96. Trust greatly influences the aim to add to the donation of money through salary deductions because the t-test value is 3.2647> 1.96. The intention significantly affects the behavior of contributing to Waqf money through salary deductions because of the t-test value of 13.8070> 1.96. Based on the study's results, respondents are willing to make Waqf money through salary cuts. If this can realize, it undoubtedly encourages the acceptance of Waqf money, which in the end, Waqf will further contribute to community economic empowerment (Maukuf Alaih). Related to that, we need a role model first to make further policy steps.

Reducing inequality and establishing social justice by balancing the distribution of income and wealth is one of the main concerns of economic policymakers which has been emphasized in the constitution in Iran. Explaining the relationship between inequality and its causes has been one of the most challenging areas of economic debate in the recent decades; despite extensive research in this area, there are still many ambiguous issues in this regard. In recent years, new hypotheses have been proposed by the French economist, Thomas Piketty on the main causes of the spread of inequality. In his analysis, he considers the gap between the rate of return on capital and the rate of economic growth (r-g) to be the main causes of inequality. However, despite providing logical explanations consistent with changes in inequality patterns, he has not conducted any empirical tests for its scientific-theoretical chain. Therefore, these question arise as to how empirically verifiable the Piketty hypothesis is and is it able to explain the increase in inequality of different countries? For this purpose, a Stock-Flow Consistent (SFC) model was used as a first model in the present study to investigate the relationship between inequality and growth in a macroeconomic framework of Iran. This model tests the conclusions and Piketty assumptions for the Iranian economy when changing key parameters. The results of this model showed that under certain circumstances with decreasing growth rate, income inequality increases. However, the analysis proved that there are no inevitable conditions under which a reduction in the growth rate will lead to a sharp increase in the level of inequality.

The importance of monetary and fiscal policy coordination, in view of the financial crises of recent decades, has increased more and this has led countries to adopt coherent and coordinated policy combinations to deal with the adverse effects of crises on the economy. To examine the situation of coordination and interaction between monetary and fiscal policy in Iran we use a time-varying parameter VARMA model with stochastic volatility. Following Klime et al. (2016) which is based on Sargent and Surico (2011), we drive law-frequency relationship between inflation and government fiscal stance which reflects a time-varying indicator of the interaction and coordination of monetary and fiscal policy, because if the monetary and fiscal policy is coordinated, the relationship between inflation and the government's financial situation will be low. The results show different monetary and fiscal policy interactions during different presidential era. The highest level of coordination between the two policymakers occurred in the final years of the second term of the presidency. However, in the third term of the presidency, the level of interaction between the two policymakers increased. Finally, in the last years of this period, the two policymakers have moved towards coordination, and this trend has continued in the next presidential period, and the least turmoil in this coordination has occurred in the last period.

Compared to GARCH, ARDL, VAR, and similar methods that are commonly used for stock market analysis and portfolio pricing, the quantile regression has proven to be more advantageous. In this study, we combine the quantile regression with wavelet decomposition to analyze different investment horizons in Tehran Stock Exchange. The discrete wavelet decomposition is used to divide the indices time series into short-term (2-16 days), mid-term (16-128 days), and long-term (128-512 days) horizons. The investment horizons are then accurately studied in a bear, normal, and bull market. Since Iran is an oil-exporting country and its economy is highly impacted by fluctuations in the USD exchange rate return, it is of crucial importance to analyze the effects of oil price and free-market USD exchange rate return on the stock market for investment policy-making and portfolio management. The results demonstrate how the exchange rate return volatility and the OPEC basket price fluctuation affect the stock market. The results illustrate strong evidence on the assumption of a long-term strong positive correlation between TSE and the USD exchange rate return increase.

Nigeria is unarguably one of the countries with its citizens widely spread across the globe and the income earned forms a huge chunk of remittance back to Nigeria. The study focuses on what implications remittances may have for unemployment in Nigeria. Remittance is treated as being endogenously determined by the number of migrants, the nominal exchange rate (with the Naira as local currency), the inflation rate and the migrants’ income. Data from 1981 to 2019 is calibrated for structural break points and stationarity under conditions of regimes changes. While the data was found to have been affected by regime changes and stationary in levels, an Instrumental Variable Regression model was estimated and it was found that remittance positively and significantly influence unemployment. However, when remittance is interacted with the dependants in Nigeria, unemployment is observed to fall. The study strongly recommends that fiscal planning should take an account of the inflow of remittances when curbing unemployment. The study further recommends that there is the need to deliberately encourage a rise in the demand for the Naira as this would protect the value of locally produced goods from being eroded by remittances.

The aim of this study is to identify and evaluate the factors that influence credit risk employing a multinomial logistic regression approach. For this purpose, in the first phase, indicators that affect credit risk assessment of natural customers were identified using documentation and library method. Then, the final data on the indicators were collected, including 7330 files of natural customers of Mellat Bank, and multinomial logistic regression was employed in studying the indicators of credit risk assessment of the bank’s natural customers in the four classes of timely receipt, overdue, deferred, and non-performing loans. The results of the estimated model show that the indicators of gender, loan value, age, installment interval, previous loan, occupation, loan repayment term, number of installments, quantity of each installment, loan extension, type of collateral, average balance, facility interest rate, type of facility, and education level have a significant impact on the credit risk of real customers.

The present study aimed to investigate the expandability of Iranian export to Brazil using both micro and macro-level approaches. At the micro-level, Iran's export that keeps pace with the Brazilian market were identified based on relevant conventional indicators including normalized revealed comparative advantage index, Cosine index and simple estimation of trade potential. Using HS two-digit data from 2001 to 2018, it is shown that Iran has an export potential to Brazil for some commodities. The impact of major macroeconomic factors on Iran's exports to Brazil is analyzed based on the gravity model and applying the vector error correction method (VECM). In the short-run and the long-run, the results confirm that Iran’s GDP, the joint population size of the two countries, air freight cost have a positive effect while Brazil’s GDP and Linder variable harm Iran’s export to Brazil. The ratio of the official exchange rate of Iran to Brazil has a positive effect in the short-run and a negative effect in the long-run. Brazil's membership in the WTO has a significant positive effect on Iran's exports to Brazil. While the impact of financial and nonfinancial sanctions on Iran's exports to Brazil is not significant. In summary, based on the macro-level indicators, the development of trade relations is logically justified. However, trade capacity between the two countries has not been realized in the given period due to political and international circumstances (not because of the lack of economic justification).