Iranian Journal of Economic Research
Year:2009 | Volume:10 | Issue:37|Papers Count:13

There are different and sometimes contradictory views on the effects of exchange rate fluctuations on the economic growth. Having studied the views on the subject, it seems the cause of the ambiguity is to a great extent, depends on how considering the role of financial development in the analysis. Aghion et al. consider explicitly the role of financial development in their study of the effects of exchange rate fluctuations on the economic growth. They conclude the recommended type of exchange rate regime depends more on the level of financial development of the related economy. The effect of exchange rate volatilities on economic growth is negative in the low level of financial development and is positive in the high level of financial development. In our paper, we test their theory by using five-year average annual data of 69 selected countries and by using the panel data method. The results confirm the Aghion et al.'s view. So, for the less developed economies, usually with low level of financial development, the recommended policy is try to minimize the exchange rate fluctuations.

This paper empirically investigates the relationship between banks and economic growth emphasizing the transmission channels from financial development to growth in Iran using time series methodologies, namely Johansen’s co-integration and Granger causality methods in the context of error correction models (ECM). The results show that in our case study banks affect economic growth mainly through the capital accumulation channel. Because of financial backwards and market imperfections, agents face many borrowing constraints, which may hinder their ability to invest at optimal levels. In this situation, the role of banking system in increasing investment through capital accumulation is expected to be strong.  In our study, we do not find an evidence for productivity channel, perhaps reflecting inefficiency of the Iranian banking system, which imposes many restrictions on bank choices such as credit rationing and directed finance under financial repression. Our results strongly support the supply-leading hypothesis. The main policy message of the paper is that banking system development matters for investment and economic growth in Iran. Therefore, policies that affect financial system are also likely to influence investment and economic growth.

The financial repression literature indicates that government interventions in the financial market, such as interest rate ceilings on bank deposits, high reserve requirements, direct intervention on bank credit allocation, and rules and regulations limiting current and capital accounts would restrict and even repress financial markets leading to negative real interest rates In this research, investigate the relationship between financial repression and economic growth using different indices for financial repression. We use a panel data encompassing 92 countries (including 33 less developed, 38 emerging market and 21 industrialized countries) over the period 1985 to 2005. We find that the negative real interest rates have negative effect on economic growth.

Higher education is important to the socio-economic development. This paper examine the causality between investment in higher education and gross domestic product (GDP) in Iran.  To this end, standard Granger causality test, Hsiao test, and ARDL method have been applied to test the hypothesis that investment in higher education causes GDP to rise. The period of the study is 1974-2004. The findings of the research show that investment in higher education neither causes GDP, nor is caused by GDP. All three methods confirm this result.

Wage adjustment and its relation with labor productivity are factors in firms’ decision making. This paper aims to identify the dynamics of wages and labor productivity on the basis of data available for manufacturing sector in Iran. The techniques used in this paper are ARDL and ECM models. The results show that labor productivity, average years of education of employees, and minimum wage rate have positive effects on real wage in manufacturing sector. The results are valid in both short-run and long-run analysis. The findings also indicate that wages in manufacturing are driven in the short run by the wages in public sector, however, the opposite is not true. On the basis of such finding, it is suggested that wage policy should target the real wages by increasing the productivity of labor force engaged in manufacturing sectors.

In this paper, the behavior of Iran's imports during the period 1353-1382 is studied using disaggregated expenditure components of total national income. Using disaggregated components of total national income for obtaining import demand is a new approach that differs from traditional approach, which only uses domestic income and relative prices. In this regard, we use ARDL cointegration method and in case of imports demand, Error Correction Model. The study shows inelastic import demand for all the expenditure components and relative price. In the shortand long-run, exports and Investment are the major determinants of imports in Iran. demand for imports is not very sensitive to price changes.

It is argued that Small and Medium-sized Enterprises (SMEs) play an important role in job generation. However, recent studies, in developed countries show that only a few SMEs has achieved high growth and created the most of the jobs. This paper aims to find the role of high growth SMEs in job generation in Iran during the Second Development Plan in1995-99. We use a large sample of manufacturing SMEs, for those with less than 50 employees. We measure growth of SMEs by absolute, comparative and Birch IndicesWe find that only 10 percent of manufacturing SMEs show rapid growth, but they are responsible for more that 50 percent of total jobs created after four years.

This study examines short run dynamic linkages between exchange rates and stock prices in for an oil exporting country of Iran, during upward and downward periods of oil price for the period 1999 to 2006. We consider two normal and crisis periods with respect to the stock market activities. We use a VAR model and the Granger causality tests developed by Toda and Yamamoto (1995). Our results show that there is a significant causal relation from oil prices to stock prices and then from stock prices to exchange rates during the periods of increasing oil prices periods. Furthermore, we do not find a significant causality between stock prices and exchange rates during these increasing oil price periods. during the crisis period, however, the interactions between markets would collapse.

This paper employs the hedonic property value analysis to extract the value of clean air for families in metropolitan Tabriz. The results obtained from combining data on house values and their characteristics (taken from the Tabriz Family Life Survey) and data on the average level of pollutants in this city indicate that air pollution has a negative effect on housing value. In other word, individuals show a preference toward environmental amenities when they choose their houses. Furthermore, a segmentation of the housing market shows that the average marginal willingness to pay (MWTP) for improving air quality in upper-income households occupying spacious housing-units exceeds that of lower-income households occupying units with less preferable characteristics. In addition, the level of household's education affects on their MWTP.