Iranian Economic Review
Volume:27 Issue: 70, Winter 2023

This study aims to examine and analyze the factors, which influence house prices from the demand side in developed and developing countries. It was tested using the Generalized Method of Moments with the dependent and the independent variable of the house price index involving real interest rates, credit, economic, and population growth. This study uses 54-panel data that is divided into 31 sub-groups of developed countries and 23 developing countries from 2005 to 2017. This research tries to contribute to observing the role of macroprudential and monetary policies in controlling housing prices globally in both developed and emerging markets as well as looking for the relationship between credit growth and house prices because credit is the closest macroprudential and monetary policy channel to the real sector. The results showed that interest rates, credit, economic, and population growth significantly affect housing prices. Interest rate variables have a negative effect, while credit, economic growth, and population growth have a positive effect on house prices. The influence coefficient's magnitude is different from developed countries to have a more significant influence than developing countries. Another result shows that the improvement of the house price index caused by credit growth enhancement in developed countries is greater than in developing countries. Furthermore, the study provides suggestions for policymakers to control house prices due to a reduction, which causes a financial crisis. Therefore, the government needs to enter into financial institutions to increase prudence in the housing finance system.

A plethora of literature on the nexus between exchange rate volatility and trade is available in the context of Pakistan; however, the majority of studies suffer from the exigency of aggregation bias because of using aggregated level data. To tackle the issue of aggregation bias, the current research deploys disaggregated level (commodity-wise) data to explore the effects of oscillations in the exchange rate on bilateral trade between Pakistan and its major trading partner Saudi Arabia. Employing the annual data from 1981 to 2018, ARDL bound testing approach confirms the long-run association among the modeled variables. The application of the ARDL approach reveals the following results. First, exchange rate volatility exhibits dynamic effects on 72% of total exporting industries in the short-run, while this impact reduces to 51% of exporting industries in the long-run. Second, 56% of total importing industries demonstrate a significant response to the volatility in the short-run, while these effects expand to 73% of importing industries in the long-run. Third, the current study's unique finding is that three big industries of exports function coded as 42, 66, and 75 with a share of 35%, 7% & 6%, respectively, enjoying the positive effects of the volatility in the long-run. Also, the current work suggests some appropriate policy recommendations.

Prevailing views in Iran suggest that the financial sector mobilizes more resources to services than to the commodity-producing sectors. On account of double counting in intermediate inputs, the conventional multipliers derived from the Financial Social Accounting Matrix (FSAM) cannot solve this problem. As an alternative to conventional multipliers, FSAM GDP multipliers that indicate the growth performance of a financial system of the economy are proposed. Using a newly constructed 2016 FSAM for Iran, both conventional and GDP multipliers of the Real Social Accounting Matrix (RSAM) and FSAM have been worked out. The overall findings are as follows: First- the average conventional and GDP multipliers in FSAM are larger than their corresponding figures in RSAM. Second- in RSAM, the average conventional multipliers of commodity-producing sectors are larger than services whereas the GDP multipliers give the opposite pictures that support the prevailing opinions in Iran. Third- Concerning conventional and GDP multipliers at the sectoral level, the results show that in the case of conventional multipliers, 8 out of 10 top highest multipliers are commodity-producing sectors whereas GDP multipliers give exactly the opposite trend which vindicates the resource mobilization of financial sector towards the service sectors.

A country’s population carrying capacity is the maximum population a country can tolerate depending on its resources and environmental conditions. An awareness of a country’s population carrying capacity can be of great help to development planners. Despite the importance of this variable, few studies have attempted to estimate it, particularly at the country level on which no study was found to have focused. The present study aimed to calculate the population carrying capacity of Iran using the expanded logistic equation, the generalized extractable energy resources equation, and the Extraction-environmental Kuznets curve (XEKC). The population growth rate of Iran, as a country with abundant primary energy and natural resources, has always been positive and its population now stands at about 83 million. The simultaneous estimation of parameters from three equations using multi-objective optimization showed that Iran’s population carrying capacity was about 95 million. It is important to note that this estimate of the population carrying capacity was based on Iran’s current economic growth. This means that with the growth and expansion of the economy, the population carrying capacity of Iran can be estimated higher. Also, the EKC was established with 99.5% confidence for the Iranian economy, and the value of the per capita income at the turning point of the inverted U-shaped curve was 0.435 billion Rials. Meanwhile, the amount of GDP per capita for the Iranian economy was 0.157 billion Rials at the time of this study, showing Iranian economy was on the upward sloping portion of the curve.

The agriculture sector is a significant contributor to food security and employment in India, where sustainable yield in agriculture is a prime concern. The heavy and improper use of chemical fertilizers persists in technically inefficient agricultural production. This study attempts to evaluate the technical inefficiency of chemical fertilizers' use and measure the potential minimization of fertilizer input without compromising the agricultural yield level. The study uses secondary data from 2006 to 2015 from 28 Indian states and empirically analyses the efficiency of chemical fertilizers use and their impact on agricultural yield by incorporating slack-based Data Envelopment Analysis (DEA). Three chemical fertilizers, namely; Nitrogen (N), Phosphorus (P), Potassium (K), and gross irrigated land area, have been taken as input variables, and States Total Food-grain (STFG) has been taken as the output variable. The conventional slack-based DEA procedure may have biased efficiency estimates, therefore in the second step, the Double Bootstrap DEA procedure is followed to correct the biasness of efficiency scores that further checks the moderating relation between efficiency scores and agricultural credit using #algorithm1 and #algorithm2 of Simar and Wilson (2007). Findings indicate that fertilizer K has a higher possibility to decrease, followed by P and N. Evidence from double bootstrap establishes a positive relationship between agricultural credit and yield. Hence, farm-level policies, budgetary implications of agricultural credit, and awareness about the proper use of fertilizers will help reduce chemical fertilizer intensiveness in production and enhance the farmers’ income through input saving strategy.

Until recently, attracting FDI was officially a key priority of Chinese economic policy, but there has been a gradual shift in the focus on outward foreign direct investment (OFDI) from China. China's OFDI is characterized by several features, due to the specifics of the economic model of this country. Thus, the economic expansion of China and other emerging countries requires the development of a new theoretical model that would analyze the characteristics of foreign direct investment in a specific financial and institutional environment. The theoretical model was developed based on the study of Helpman (2004) focused on the influence of enterprise political relations on OFDI decisions and the relationship between political relations and productivity in management decisions. Several hypotheses follow from the theory: (a) the thresholds for political ties and productivity required for FDI increase as the recipient country's investment climate deteriorates; (b) the growth of political ties and productivity growth increases the likelihood of OFDI.

This study has examined the effect of remittances on the labor force participation decisions and preferences of individuals towards different employment statuses and work categories. The data from the rural and urban areas of the two provincial capitals of Pakistan has been collected to cover the main range of the topic. The study adds to existing literature the three major implications of labor market outcomes in response to remittances. First, the Logit and Probit model estimates suggest that remittances significantly increase the likelihood of not participating in the labor force. In addition, the differential effect of remittances depicts that as monthly remittances increase from 10,000 to 500,000PKR, the likelihood of participating in the labor market decreases from 0.84 to 0.30 respectively. Second, estimates of the multinomial logit model reveal that among different employment categories, remittances increase the likelihood of participating in non-employment. While in the case of participation in the labor market, they are more likely to prefer full-time self-employment status. Third, estimates of the multinomial logit model depict that remittances increase the likelihood of participating in self-employment and employer profession among different work professions. The study's results suggest that policy implications on reallocating labor from non-employment to self-employment or employer can generate productive outcomes. Furthermore, incentives in the adoption of self-employment and improvement in ease of doing business are essential to spill over the effect of remittances as job creators.

Food deficit is one of the main problems of the developing countries which could be attributed to various determinants and factors. This study highlights the role of trade openness in eradicating food deficits in Sub-Saharan African countries. The estimation techniques employed in this study are capable to control the unobserved heterogeneity and endogeneity problems. The findings show that increased trade openness, agricultural production, and population growth have negatively influenced the food deficit problem. Similarly, inflation and domestic investment also appeared to help curb the problem of food deficit. Furthermore, per-person income and political stability have worsened the food deficit problem, while government consumption has not had any significant impact on the food deficit. It is suggested that the African economies shall speed up the process of trade liberalization, and pay favorable attention to the agricultural sector and domestic investment in the presence of moderate inflation to eradicate food deficit.

Investigating the import demand function has particular importance in identifying the macroeconomic models and effectiveness and commercial efficiencies of the Iranian economy. For this reason, one of the major issues that can be addressed in the field of importing goods is the estimation of import demand function and investigation of impacting factors on imports. Therefore, in this paper, by using seasonal data for the period 1992-2017 and applying the almost ideal demand system (AIDS), and using a seemingly unrelated regression (SUR) econometric technique, we have estimated import price and income elasticities for five commodity groups based on one-digit tariffs code for the Iranian economy. The empirical results indicated that the import allocation pattern is single-stage and depends on domestic sales. In addition, the own-price elasticities had a negative sign that supports import behavior. Cross-price elasticities also showed a poor complementarity between the other portable and metal commodities and, Social & personal services and Financial & Business Services, domestic sales with Agricultural, forestry & fishing products, other portable & metal commodities, and Financial & Business Services groups. The expenditure elasticities in five commodity groups were significant, except in the first group, which implied the effectiveness of demand for each commodity group relative to income.

The study investigates the behavioral dependence of domestic institutional investors (DIIs) on the sectoral indices of the national stock exchange of India. For the first time in the Indian context, domestic institutional investors are studied in a broad sense, i.e. the study does not include merely mutual funds, but financial institutions, insurance companies, and venture capital funds also. The results reveal positive and strong behavioral dependence of many sectoral indices in the national stock exchange on financial institutions, insurance companies, and mutual funds. The Correlation results support the results of the Toda Yamamoto model by showing strong and positive correlations of sectoral indices vis á vis financial institutions, insurance companies, and mutual funds. The results of the Toda Yamamoto model for venture capital funds, on the other hand, are insignificant with a weak correlation. In contrast to the findings of many previous studies that mutual funds do not affect future stock returns the current study reports that causality runs from financial institutions, insurance companies, and mutual fund investments to sectoral indices of the national stock exchange of India. These results illuminate the important role played by domestic institutional investors in Indian stock markets.

This study presents an empirical analysis of policy choices for poverty control in Nigeria. Using annual data from 1980 to 2019, we constructed a Vector Error Correction Model (VECM) and simulated Forecast Error Variance Decomposition (FEVD) to explain the role of economic freedom, fiscal policy, and monetary policy in poverty alleviation. The results reveal that expansionary fiscal and monetary policies can mitigate poverty in Nigeria. However, monetary policy is found to be less effective than fiscal policy. Additionally, an expansionary fiscal and monetary policy mix worsens poverty. Moreover, a high degree of economic freedom, by itself, increases poverty. Furthermore, the results suggest that a policy combination of expansionary fiscal policy and a greater degree of economic freedom exacerbates poverty. Finally, concurrent expansionary monetary policy and an improved degree of economic freedom can reduce poverty. These findings are applicable in both the short and long term.

The co-existence of crime rate, misery index, and urbanization has become an emerging challenge across the developing globe. The present research primarily explores the economic and demographic factors affecting the crime rate in the country and identifies the co-incidence of the crime rate, misery index, and urbanization in Pakistan. The study is based on the annual time series data to be collected through various secondary sources from 1973 to 2020. ARDL Bound testing technique has been used to determine the short-run and long-run association among the variables. The findings of the study exhibit the long-run relationship connected with crime rate, misery index, and urbanization. The results suggest that the increasing misery index and widening urbanization largely contribute to magnifying the crimes in Pakistan. The government may take suitable measures to improve the miserable situation and demotivate the urbanization factor; therefore, the crime rate may decline in the country.

Having a good stock portfolio, which is one of the most important factors in making money in the stock market, requires the correct choice of criteria. This issue for new stock traders in the Tehran Stock Exchange (TSE) who do more than 50 percent of daily transactions in this market, due to their lack of sufficient experience, seems thoroughly essential. As a result, newcomers who were trading in the Tehran Stock Exchange in 2020 have been invited to participate in this study. After identifying the most influential variables in portfolio selection via the Delphi method, these factors have been ranked based on Shannon’s Entropy Approach. The results show that Familiarity, Net Profit Ratio, and Stock Price are respectively the main priorities of new entrants in choosing the stock portfolio. Besides, risk-related variables have generally the least importance in stock portfolio selection from the perspective of new entrants.

This paper examined the interaction effect of energy prices on the relationship between financial instability, trade openness, and non-OPEC countries' economic growth. The paper used panel time series data from 1970-2018. In addition, the paper applied a second-generation approach. The results of the cointegration test revealed a long-run relationship among the variables. Moreover, the results showed that financial instability, energy price, and the 2014 energy crisis have a negative effect on economic growth, while, trade openness has a positive effect on economic growth. Additionally, the results confirmed that the interaction term of energy prices and financial instability is negatively affecting economic growth, but the interaction term of energy prices and trade openness is positively affecting the economic growth of non-OPEC countries (emerging ASEAN economies). However, the results of the causality test indicated a one-way causal relationship between financial instability to economic growth, energy price to economic growth, and trade openness to economic growth. The empirical findings also suggested that interventions from the policymakers of the emerging ASEAN country could provide rigidity or policies on financial repression, instead of a more flexible financial system, designed to expand growth and stability in focused macroeconomic policies through financial rules. To control energy use and stabilize prices in ASEAN countries, there should be a comprehensive energy policy, which may have a negative impact on their economies, as most of the emerging ASEAN countries have not relied on oil revenues.