Financial monetary economy
Sayed Abolfazl Vaziri; Abbas Yazdani; Mahdi Sadeghi
Abstract
1- INTRODUCTION
Compulsory loan and its macroeconomic effects, especially its effect on inflation, have always been discussed by economists in Iran. In the current research, the effect of credit compulsory loan on inflation has been evaluated. In order to estimate the model we used data from ...
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1- INTRODUCTION
Compulsory loan and its macroeconomic effects, especially its effect on inflation, have always been discussed by economists in Iran. In the current research, the effect of credit compulsory loan on inflation has been evaluated. In order to estimate the model we used data from 1990-2018. The data have been measured by using vector autoregression (VAR) method. According to the results of the research, it is suggested to replace the policy of granting compulsory loan with other existing policies such as product coupon and purchase remittance in the field of supporting weak households and value chain financing to increasing supply.
2- THEORETICAL FRAMEWORK
Compulsory loan is a loan that is imposed on the banking system according to the notes of the budget laws and other laws. In other words, banks are responsible for granting assigned loans based on the approvals of authorities outside the banking system. These loans are one of the government's policies to support the vulnerable sections of the society. Every year, in note 16 of the country's budget, a decision is made by the government and the parliament in relation to the debt relief.
3- METHODOLOGY
In this research, the data is time series. To analyze the data we choose from various models of the vector autoregression (VAR), which is actually an unrestricted method in econometrics. the vector of variables is a function of its own intervals and other endogenous variables. The vector autoregression method has the following feature: all variables in this model are endogenous, the results of the model in many cases are better than the results of complex models; It is like simultaneous equations, estimation of the model is simple.
4- RESULTS & DISCUSSION
According to the tests, it has observed that a one percent increase in the compulsory loan will increase the consumer price index by 0.4 percent; one percent increase in the nominal interest rate also leads to a 1.25% increase in the consumer price index. Also, the effect of the instant shock of the loan facility rate on the consumer price index and the nominal interest rate is not significant. Next, in the analysis of variance method, the contribution of impulses entered on the model variables was evaluated and it was found that in the 5 first periods (of 10 periods) the largest prediction error of the consumer price index rate variable is explained by the LCPI variable. From the 6th period to the 8th period, however, the explanatory contribution of the nominal interest rate is higher. In the 9th and 10th periods, the compulsory loan rate has the largest contribution in explanation the variable prediction error of the consumer price index.
5- CONCLUSIONS & SUGGESTIONS
The budgeting system directly and indirectly affects monetary policies. One of the channels of this influence can be followed in the budget notes. Every year, in some laws of the country, especially in the annual budget laws, the banking system is burdened with tasks, and in some of these cases, due to the preferential rate of these loans, or in other cases, due to the high default of these loans, the country's banking system has suffered imbalance. In this regard, increasing of the monetary base was not only through the growth of banks' balance sheets. Rather, the financial dominance of the government and the impact of financial rulings on the balance sheet of the central bank in the form of borrowing from the central bank, buying government bonds has also caused the expansion of the government's debt and the net foreign assets of the central bank, as well as the monetary base.
Financial Economics
Mahdi Jalili; Elnaz Entezar; Tahereh Akhoondzadeh Yousefi; Mohammad Sokhanvar
Abstract
1- INTRODUCTION
Undoubtedly, it is possible to achieve long-term and continuous economic growth in any country by equipping and optimally allocating investment resources in the national economy of that country, and the role of developed financial markets is necessary to achieve this goal. In fact, the ...
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1- INTRODUCTION
Undoubtedly, it is possible to achieve long-term and continuous economic growth in any country by equipping and optimally allocating investment resources in the national economy of that country, and the role of developed financial markets is necessary to achieve this goal. In fact, the role and importance of the financial system in the development process of countries is such that the difference between developed and developing economies can be found in the degree of efficiency and effectiveness of their financial system. Financial development is a category, which, according to the developments of financial markets, following the discussions of globalization and financial integration after the 70s, was taken into the attention of economists. Therefore, considering the importance of the financial development category in different countries, the study of factors affecting it has always been emphasized. Financial development is a set of factors, policies and institutions that lead to the creation of effective financial markets and financial intermediaries and provide deep and wide access to capital and financial services.
2- THEORETICAL FRAMEWORK
Many factors can influence the development process of financial markets, among which, the role of the combined index of globalization and inflation can be very important. Some economists and economic policymakers, such as Greenaway and Baltaji, believe that globalization leads to better macroeconomic performance and faster financial development in terms of financial and commercial openness, which many empirical studies support this view. International institutions such as the World Bank, the International Monetary Fund, and the Organization for Economic Cooperation and Economic Development advise member countries to believe that commercial and financial liberalization has a positive effect on financial development.
3- METHODOLOGY
In this research, the non-linear effects of globalization and inflation on the financial development index (facilities granted by the banking system) in Iran during the period 1368 to 2020 have been investigated by using the Markov switching econometric technique.
In this study, the dependent variable is financial development, and the independent variables are inflation, globalization, capital stock, and government spending.
4- RESULTS & DISCUSSION
In the first regime, the economic dimension of globalization has a positive effect on financial development, which indicates that, due to the increase in the economic dimension of globalization, the index of financial development (facilities granted by the banking system) increases. But in the second regime, the economic dimension of globalization has a negative effect on financial development, which indicates that, due to the increase in the economic dimension of globalization, the index of financial development (facilities granted by the banking system) decreases.
Inflation caused by demand pressure and monetary inflation in both regimes has a negative effect on financial development, which indicates that, due to the increase in inflation caused by demand pressure and monetary inflation, the index of financial development (facilities granted by the banking system) decreases.
Human capital in both regimes has a positive effect on financial development, which indicates that, due to the increase in human capital, the financial development index (facilities granted by the banking system) increases.
In the first regime, capital stock has a positive effect on financial development, which indicates that, due to an increase in capital stock, the index of financial development (facilities granted by the banking system) increases. But in the second regime, it has no effect on financial development. Government spending in both regimes has a negative effect on financial development, which indicates that, due to an increase in government spending, the financial development index (facilities granted by the banking system) decreases.
5- CONCLUSIONS & SUGGESTIONS
The results of the estimates indicate that the sources of inflation (inflation caused by demand pressure and monetary inflation, structural inflation, inflation caused by cost pressure and imported inflation) had a negative effect on financial development in both regimes. Regarding the dimensions of globalization (economic dimension, social dimension and political dimension), we saw a positive relationship in the first regime and a negative relationship in the second regime. In connection with the results of the control variables, the variables of capital stock and human capital in both regimes had a positive effect on banking facilities, but the effect of government spending on banking facilities in both regimes was negative. Now, according to the results, policy proposals are presented as follows:
- What can be stated with certainty is that paying attention to globalization and joining international organizations such as the World Trade Organization can help improve the performance of financial development indicators in Iran. Because Iran has a long way to go on the path of globalization and integration into it. Therefore, the economic, political, social and cultural dimensions, especially the political dimension, need a fundamental revision.
Financial monetary economy
Mohammadtaher Ahmadishadmehri; fariba osmani; mahdi cheshomi
Abstract
Today, one of the problems of developing countries is increasing inflation. On the other hand, the political situation of many developing countries is also unstable. In addition, with the emergence and growth of new technologies and complex products, the effects and how the change of new structures affects ...
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Today, one of the problems of developing countries is increasing inflation. On the other hand, the political situation of many developing countries is also unstable. In addition, with the emergence and growth of new technologies and complex products, the effects and how the change of new structures affects the inflation rate are unclear.The aim of this study is to investigate the effect of economic complexity and political stability on the inflation in a panel of 15 developing countries in Asia during the years 1997-2018 using panel-quantile regression. In addition, the variables of GDP per capita, liquidity and exchange rate were considered as the explanatory variables.The results of quantile regression showed that the increase in liquidity and exchange rate increases inflation. As the economic complexity increases, the inflation rate decreases in all quantiles. In addition, increasing political stability helps to improve economic conditions and reduce inflation. Therefore, it can be concluded that inflation in developing countries is not only a monetary phenomenon and political and economic factors also affect it. In addition, the results of this study show that there is no significant relationship between GDP per capita and inflation, which indicates the verticality of the Phillips curve in the group of developing countries.
samira zareinezhad; kiomars sohaili; Shahram Fattahi
Abstract
Extended abstract
1- INTRODUCTIO
In order to have an effective monetary policy, it is necessary for the monetary authorities to have sufficient information about the effect, the channels of start the effect, the duration of the effect and the time when the effect of the monetary policy effect peaks. ...
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Extended abstract
1- INTRODUCTIO
In order to have an effective monetary policy, it is necessary for the monetary authorities to have sufficient information about the effect, the channels of start the effect, the duration of the effect and the time when the effect of the monetary policy effect peaks. Therefore, it is necessary to examine the intersection of credit channel, housing price channel, stock price channel and exchange rate channel in the nonlinear transmission mechanism of monetary policy on inflation in the Iranian economy. It has a structure in different regimes and the data of the central bank are used during the years1978-2017.
2- THEORETICAL FRAMEWORK
Monetary policy is a set of actions that the central bank (monetary authority) through monetary instruments affect many economic goals such as price stability, exit from recession, stimulation of economic growth and increasing employment. This effect of monetary policy on the set goals and improvement in macroeconomic performance will indicate the efficiency of monetary policy. Central banks, as monetary policy makers in most countries of the world, seek the effectiveness of their monetary policies and to better understand the structures governing their economic environment in order to implement appropriate and timely policies and put economic variables on the path of growth and development. In this regard, how to formulate monetary policy and use monetary instruments is of particular importance in macroeconomics.
3- METHODOLOGY
A novel feature of the Markov switching model is that the regime change mechanism in this model depends on a status variable. in other words, the recent value of the state variable just depends on the its value in previous periods. to calculate the unconditional probabilities in a model that include two regimes indicate the probability of being in each regime, we can consider the possibility of changing the parameters in different regimes, the linear VAR model transforme the MSVAR model:
4- RESULTS &DISCUSSION
The role of the exchange rate channel in transferring money to inflation is positive in both regimes, meaning that it increases inflation. Given the structure of the Iranian economy and due to the high dependence on the price of finished products of domestic production to imported capital goods, it seems that the exchange rate will play a dominant role in determinayion the fate of inflation in the Iranian economy.
The role of housing price channel in transferring money to inflation in regime one increases inflation and negative effects on monetary policy in Iran’s economy, while in regime two, housing price channel in transferring money to inflation has played the largest share in reducing inflation.
The role of corporate credit channel in transferring money to inflation in the regime has a greater share than the second regime in transferring money to inflation. As a result, in economic policies, special attention should be paid to the inflationary effects if the granted facilities.
Stock price channel, support of the stock market should be one of the main priorities of officials. Because in the Iranian economy, which is always involved in high inflation, the stock market without inflationary effects can increase investment to increase production.
5-CONCLUSIONS & SUGGESTIONS
According to our results, it is suggested that to control inflation, policymakers should pay special attention to changes in currency price. At the same time, the policymaker can reduce the dependence of the country's industry on the import of capital goods and strengthen domestic financial instruments, such as the return on bank deposits, stock exchanges, etc. To strengthen other transfer channels so that it can rely on other channels to control inflation.
Mohammad Ali falahi; mostafa salimifar; fateme mardani
Abstract
Introduction
One of the advantages of Friedman’s theory for committing to a monetary policy is that firms, workers and consumers would be able to form their expectations about the future policies implemented by the central bank and monetary authorities. The intuition of the time inconsistency concept, ...
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Introduction
One of the advantages of Friedman’s theory for committing to a monetary policy is that firms, workers and consumers would be able to form their expectations about the future policies implemented by the central bank and monetary authorities. The intuition of the time inconsistency concept, introduced by Kydland and Prescott (1977) who won the Nobel Prize in Economics, is about a situation in which “being optimal in past” is different from “being optimal in future”. This problem arises, because the preferences of individuals would change during the time of making decisions until the time of implementing the chosen policy. If private sector knows and believes that the central bank is committed to a certain inflation target, then, the economic performance will improve by lower inflation expectation and lower inflation rate at a given rate of unemployment. But sometimes when the announced policy is believed by private sector, the authorities get incentives to change the policy in order to lower unemployment by making an unexpected inflation. Therefore, the unemployment would be lower than natural rate and the production level would rise more than full employment level.
In this study, the existence of time inconsistency in Iran’s economy is examined in both the long-run and short-run terms based on Ireland model (1999). For the long-run, the existence of cointegration between quarterly variables of inflation and unemployment time series is tested for 1990:5 to 2015:5 and 2002:4 through 2015:5 in short-run in order to explain the dynamics and co-movement of inflation and unemployment including unobserved shocks, state space equations and Kalman filter approach are used.
Theoretical Framework
Time inconsistency concept can help to understand the incentives of policymakers to change a policy during time. If policymakers can surprise the private sector, they will attain their goals at a lower cost. But, due to rational expectations, the incentives according to time inconsistent behavior can lead to an inflationary orientation in monetary policy. The inflationary bias as described by Kydland and Prescott (1977) comes from the inability of monetary authority to commit to a low-inflation policy.
Methodology
In this study the Ireland (1999) model is applied, which is based on Barro-Gordon’s model (1983). Barro-Gordon model explains the behavior of unemployment rate based on Philips Curve and introduces an objective function for the central bank with two variables, namely, inflation and unemployment rate.
Ireland describes a more general autoregressive process for unemployment rate which contains a unit root and presents a control error term for inflation. As a result, Ireland explores long-run and short-run relationships between these two variables. If both variables have a unit root, then, one can examine the cointegration relationship between them which is confirming the existence of time inconsistency problem in the economy for the long-run term. For the short-run relationship, state-space model and Kalman filter approach are used. This study examines both terms in Iran’s economy for two quarterly times series variables 1990:5 to 2015:5 and 2002:4 to 2015:5.
Results and Discussion
For the first part, testing the cointegration constraint, Augmented Dickey-Fuller test is applied to check for the unit roots in the two series. The results show the process for unemployment contains a unit root in either sample period. The Johansen test and the likelihood ratio statistic are used to test the null hypothesis of no cointegration. The result of Johansen test rejects the null hypothesis of no cointegration between inflation and unemployment at the 0.01 significance level for the full sample and at the 0.1 significance level for the post-2002 sample. Thus, as predicted by the model, the two variables are cointegrated.
To understand the theory's implications for the short-run behavior of inflation and unemployment, the maximum likelihood estimates of the model's parameters are obtained by mapping the constrained ARMA model into the state-space form and using the Kalman filter to evaluate the likelihood function, as suggested by Hamilton (1994). At 0.01 critical value for a chi-square random variable with 10 degrees of freedom, based on model’s structure, the likelihood ratio tests do not reject the model's short-run restrictions.
Conclusions and Suggestions
Does the time-consistency problem explain the behavior of inflation in Iran? Barro and Gordon's (1983) model of time-consistent monetary policy implies that long-run trend in the natural rate of unemployment will introduce similar trend into the inflation rate when the central bank cannot commit to a monetary policy rule. Tests of the model's short-run restrictions, indicate that the model is also successful at accounting for the dynamic, quarter-to-quarter co-movement of inflation and unemployment in Iran.
The results can potentially explain the persistent inflation in Iran’s economy. In other words, in Iran’s economy which the policymaker’s decision often related to short-run term and their decisions are variable and unstable, the consideration of the outcomes of time inconsistency behavior could be useful. However, because of the major role of oil income in the economy, there are a lot of unexpected shocks which can limit the government to commit to a rule. Thus, considering not an optimal amount but an optimal range of discretionary behavior would be desirable.
shabnam sadeghi nasab; Ali Falahati; Kiomars Sohaili
Abstract
Abstract
In recent decades one of the problems that Iran’s economy had been faced is the high growth rate of liquidity in the country. The high liquidity growth have had many consequences for Iran’s economy include high inflation, currency depreciation, high interest rates and those problems pointed ...
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Abstract
In recent decades one of the problems that Iran’s economy had been faced is the high growth rate of liquidity in the country. The high liquidity growth have had many consequences for Iran’s economy include high inflation, currency depreciation, high interest rates and those problems pointed out. Since the liquidity in Iran has always been a positive growth rate, in most studies, liquidity has been introduced as one of the factors affecting on inflation, the recent study aims is examine and analyze high liquidity in Iran experimentally and as well as finding the main components.
In this study has been used Vector Auto Regressive Model (var). For this purpose, by use from time series data for the 1359-1391, examine the model.
The results obtained from the study implies that, growth rate of exchange, inflation rate, interest rate,
have a Negative and significant relationship and also growth rate of budget deficit and growth rate of GDP , have a Positive and significant relationship with growth rate of liquidity. In result can said that money inside in Iran.
Abolfazl shahabadi; Younes Salmani; Arash Valinia
Abstract
Inflation rate in different countries can be considered as a positive or negative phenomenon, depending on the circumstances of each society; however, if inflationary shocks lead to inflation uncertainty, this will impair the optimum allocation of resources and price system function, and will in turn ...
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Inflation rate in different countries can be considered as a positive or negative phenomenon, depending on the circumstances of each society; however, if inflationary shocks lead to inflation uncertainty, this will impair the optimum allocation of resources and price system function, and will in turn impose macro-economic costs on the enterprises. Due to the impact of these costs and rational behavior of economic agents on determining the expected inflation, the inflation rate may also be increased. Therefore, this study has reviewed the relationship between inflation and inflation uncertainty in Iran with an emphasis on rational expectations during the period of 1990 Q1-2015 Q4. Using EGARCH model, inflation uncertainty modeling showed that positive and negative inflationary shocks play an asymmetric role in the formation of inflation uncertainty. Also, Granger causality test and impulse response functions showed that an unanticipated inflation increase can lead to inflation uncertainty. The variance analyses also indicated that about more than 76 % of changes in inflation uncertainty can be explained in the long run, using unanticipated inflation, and also more than 16% of changes in expected inflation explained using inflation uncertainly.
Methodology
In this study, the ARCH family models were used for modeling the fluctuation, the Granger causality to examine the causality between inflation uncertainty and inflation (unanticipated and anticipated), and the Vector Auto Regression (VAR) to analyze the revealed causes.
EGARCH model has some advantages over other asymmetric models such as threshold Arch (TGARGH) including 1) logarithmic transformations requires the positive conditional variance; 2) evaluation is not sensitive to outlier observations; 3) this model is not limited to parameters and is sufficient for stability of EGARCH process. In the present study, standard Granger causality test (1986) is used to determine if there is any relationship between inflation and inflation uncertainty. This test assumes that important data to predict each variable lies in the time series data related to it. In fact, Granger (1969) stated if the current value is predicted using past value , in this case, is called the cause of . Granger causality test to investigate the hypothesis, " is not the Granger cause of ", or vice versa, uses a vector autoregressive model (VAR).
After Granger causality test, through the impulse response functions and variance analysis in vector auto regression (VAR), better evidence of influence in the Granger causality has been obtained. In fact, based on the estimation of the VAR, also used byGranger causality test, the coefficients and the percentage of Explanatory model parameters is not as important as single-equation methods; therefore, the impulse response function (impulse response) and the variance analysis have been used in the analyses. Since the impulse response function measures the time path of impulse effect on the future status of a dynamic system, the effects of impulse can be seen in VAR patterns. The impulse response on variables assumes that the system is balanced, and the balance is in the coordinate system, so that all variables are equal to zero in equilibrium. The effect of the impulses once called a temporary variable, will return to its previous equilibrium value after several time periods; if this variable does not return to zero and is not settled in different balance amounts, it will be called a permanent impact. Variance analysis can measure the relative strength of Granger causality chain or exogenous degree of variables, regardless of the measured period, so the analysis of variance can be called causality test out of the sample period. This method can determine the role of imported shocks to different variables in explaining the anticipated error variance in short term and long term.
Results and discussion
Results of Granger causality test showed Granger causality is not inflation uncertainty, and inflation uncertainty is neither unanticipated inflation Granger causality. On the other hand, unanticipated inflation is inflation uncertainty Granger causality, and inflation uncertainty is anticipated inflation Granger causality.
The results of this study showed that an unpredicted shock to the size of one standard deviation in inflation will increase inflation uncertainty as much as 0. 27158% in the first chapter, this increase reaches its peak in the second season (2. 85 511%), then the positive effects begin to decline, then turn to almost zero in Season XVI. The procedure of the effects of inflationary unanticipated shocks can be used to explain the changes of inflation uncertainty in Iran as much as 2.82% in the first season, and more than 76 % in the long run. Also, an unforeseen shock to the size of one standard deviation in inflation will increase the expected inflation volatility from the second season, and this additive process will be positive for 20 years. The climax of this impact is in season 4 (0.48354%). The effects of inflation uncertainty can display the changes of anticipated inflation as 3% in the second season, and more than 16 percent in the long term. Therefore, the results suggest that if inflation can (not) be predictable, then there will (not) be the rational expectations approach based on inflation uncertainty. Due to the rational behavior, inflation uncertainty lead to higher inflation rate.
Conclusions and recommendations:
The results of this study show that isodiametric positive and negative inflation shocks are contributed to form the inflation uncertainty asymmetrically, and positive shocks spread more uncertainty. The results of Granger also show that Friedman hypothesis about inflation uncertainty caused by increasing inflation is not true for nonanticipated inflation in Iran, and the expected inflation has rejected this hypothesis. Also, Cukierman and Meltzer hypothesis about the causality result of inflation uncertainty has been confirmed in anticipated inflation and rejected in nonanticipated inflation.
karim eslamloeiyan; Zahra khosravi
Abstract
Inflation dynamics is a subject of numerous theoretical and empirical researches in economic literature. One important economic cost of inflation is the uncertainty that it creates about future inflation rates. This in turn causes an uncertain environment for economic activities. The households and firms’ ...
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Inflation dynamics is a subject of numerous theoretical and empirical researches in economic literature. One important economic cost of inflation is the uncertainty that it creates about future inflation rates. This in turn causes an uncertain environment for economic activities. The households and firms’ decision under inflation uncertainty affects the allocation of resources and the level of consumption, investment and economic growth. Therefore, the issue of inflation and inflation uncertainty nexus is a hot topic in macroeconomic and monetary economics.
After the seventies many empirical researchers have studied inflation dynamics in different countries. In the last fifteen years many economists have investigated the relation between inflation and its uncertainty in both rich and poor countries. Some researchers argued that there is a positive relationship between inflation and its uncertainty, while there are others who find negative relationship between these two variables. More recently, Evans and Wachtel (1993) and Chang and He (2010) have shown that the inflation and inflation uncertainty nexus can be influenced by different inflationary regimes. They have shown that effect of inflationary shocks on its uncertainty might not be symmetric. In other words, the impact of positive price shocks on inflation uncertainty is different from their negative price shocks. This asymmetric effect has been the subject of recent studies.
The focus of our paper is on inflation dynamics and its relationship with inflation uncertainty in Iran. High inflation rate in recent years has adversely affected the wellbeing of many middle class and poor families in Iran and hence is an important challenge for policymakers in this country. It has become clear that the uncertainty resulted from high inflation have inflicted a heavy cost on the Iranian economy. There are many researchers that have investigated the dynamics of inflation in Iran. Among these studies, some have examined the relationship between inflation and inflation uncertainty in Iran. However, these researchers have ignored the impacts of regime switching on this relationship. The main goal of this paper is to fill this gap in the economic literature of Iran. More specifically, it examines how different inflation regimes can affect inflation and inflation uncertainty nexus in this country.
For this purpose, a Markov switching - asymmetric generalized autoregressive conditional heteroskedasticity in mean model is estimated for Iran over the period 1990:03 -2013:07. This makes it possible to change conditional variance of the error term over time and hence allows us to study the behavior of each state variable in various regimes. More specifically, the relationship between inflation and inflation uncertainty are examined in two different inflationary regimes, namely inflation pressure and inflation volatility regimes. We first study the effect of inflation uncertainty on the level of inflation in the states of increasing and decreasing inflation pressures. Second, we investigate the impact of inflation on inflation uncertainty when the economy is either in the state of high inflation volatility or in the state of low inflation volatility.
The estimation results show that in the state of increasing inflation pressure, the effect of inflation uncertainty on inflation is positive. This confirms the finding of Cukierman and Meltzer (1986). However, in the state of decreasing inflation pressure, inflation uncertainty has a negative impact on inflation. This result verifies the outcome of Holland (1995). Furthermore, when the economy is in the state of high inflation volatility, inflation has a positive effect on inflation uncertainty. This finding is consistent with the hypothesis of Ungar and Zilberfarb (1993). However, when the economy is in the regime of low inflation volatility, inflation does not affect inflation uncertainty. Moreover, we find that the effect of negative price shocks on inflation uncertainty is higher than that of the effect of positive price shocks.
The estimation results of transition matrix show that when the economy is in the state of increasing inflation pressure, it will remain in that state with probability of 95 percent and when it is in the state of decreasing inflation pressure, it will continue in that state with probability of 89 percent. In addition, when the economy is in the state of high inflation volatility, it will stay in this regime with probability of 98 percent and when it is in the regime of low inflation volatility, it will continue in the same regime with probability of 96 percent. One might infer from these findings that the inflationary regimes in Iran in highly persistence. In other words, when the economy enters an inflationary regime, the probability of chaining the state or switching the regime is low. These findings might have important policy implications for Iranian economy. Given the presence of high inflation pressure in Iran, one might suggest that monetary authorities should conduct price stability policy. This will allow them to curb both inflation and inflation uncertainty. Our results indicate that it is important for monetary authorities and policymakers to be aware of the type of inflationary regimes that the country is in, when conducting their monetary policy.
Hossein Sadeghi; Parisa Rahimi; Yunes Salmani
Abstract
Abstract
Financial distress caused by internal (Governance) and external (macroeconomic) factors can lead to a waste of resources. On the other hand, with the knowledge of the effectiveness of macroeconomic factors and Governance in financial distress, financial managers will be able to take appropriate ...
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Abstract
Financial distress caused by internal (Governance) and external (macroeconomic) factors can lead to a waste of resources. On the other hand, with the knowledge of the effectiveness of macroeconomic factors and Governance in financial distress, financial managers will be able to take appropriate actions to prevent financial distress. Investors also identify suitable opportunities to invest their own capital at minimum risk.
This study analyses the impact of macroeconomic and the Governance factors on Financial Distress in manufacturing companies listed in Tehran Stock Exchange during the period from 1382 to 1386, by using of panel Logit.
The results show that, firstly; of corporate governance factors; high levels of activity background, leverage ratio and ownership concentration increases the probability of financial distress and high levels of the firm size, agency costs, and Current Ratio reduce it.
Income and economic growth of firms reduce the probability of financial distress and inflation increases it. Secondly, the role of macroeconomic factors in health and financial distress of firms is far greater than the governance factors.
Saeid Eisazadeh; Zeinab Shaeri
Abstract
Banking system is one of the important sections in the economy. In economies those
stock exchange and other financial intermediaries are inefficient this rule is vital. In
this regard the efficiency of banking system should be mentioned in the economy.
This paper examines empirically the effect of ...
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Banking system is one of the important sections in the economy. In economies those
stock exchange and other financial intermediaries are inefficient this rule is vital. In
this regard the efficiency of banking system should be mentioned in the economy.
This paper examines empirically the effect of macroeconomic stability on efficiency
in the Middle East and North Africa (MENA) banking industry for the years 1995 to
2008 by Using panel data method. We use bank level data to study the efficiency of
banks in MENA countries and provide possible explanations for the difference in the
efficiency levels of banks. We find that banks, on average, could save 20 percent of
their total costs if they were operating efficiency. Through the stochastic frontier
approach (SFA) method we measure the cost efficiency of different banks in MENA
including Iranian banks. Then we investigate the impacts of macroeconomic State
on the efficiency level of banking industry. In this study are as inflation rate and
GDP per capita. The findings show that, the stability macroeconomic stability has
increased efficiency during the period of study.
Majed Delavare Delavare; Sajad Basir
Abstract
To day reaching a high economic growth rate is one of the main and
important aim of any economic system. Today the economists accept that
economic stability is a necessary issue, but is not enough for the economic
growth, while economic instability is one of the main elements, which
restrict economic ...
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To day reaching a high economic growth rate is one of the main and
important aim of any economic system. Today the economists accept that
economic stability is a necessary issue, but is not enough for the economic
growth, while economic instability is one of the main elements, which
restrict economic growth. The aim of this research is analysis of the effect of
stability index of economy on economic growth in the country and to reach
the mentioned aim Spain has been used.
The main results obtained are as follows : The effect of real Budget Deficit
ratio to GDP on economic growth rate at the time of study (1973-2006)on
short and long run is negaitive and meaningful. The effect of inflation and
exchange rate has negative impact on the economic growth of Iran during
the study the short and long run .During the study the effect of government
consumption expenses ratio to GDP on economic growth is negative and
finally the effect of government Investment expenses to GDP on economic
growth is positive.In as much the effect each of three indexes economical
instability on economic growth of Iran has been negative and the result show
Ali Haghighat; Khosrow Piraee; Mohammad Daneshnia
Abstract
Inflation has always been an economic problem and different solutions have been
proposed to control it. Although it is said that “higher output lowers inflation rate”
but it is true when other factors are constant. This study searches the answer to the
following question: “what is the effect ...
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Inflation has always been an economic problem and different solutions have been
proposed to control it. Although it is said that “higher output lowers inflation rate”
but it is true when other factors are constant. This study searches the answer to the
following question: “what is the effect of inflation rate and output in a case that
inflation rate and output growth has a volatility trend?”
To this aim we use seasonal data on Iran’s gross domestic product and consumer
price index from spring 1975 to summer 2008 and an exponential generalised
autoregressive conditional heteroskedasticity (EGARCH) model to show volatility
the variables.
The results of this study show that there is an autoregressive conditional
heteroskedasticity (ARCH) process in the output growth and inflation rate. We also
find that the inflation rate and output volatility increase Inflation rate and the output
volatility higher output growth. The hypothesis that the inflation rate volatility
lowers output growth can not be accepted.
Ali Akbar Naji Meidani; Mahindokht Kazemi; Mandana Ghafuri
Abstract
This research uses econometrics techniques to study significant correlation between poverty and globalization of economy and investigate mechanisms influence of globalization on poverty in the economy during the period 1984-2004.
In this context, the estimated three models discussed. In the form of ...
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This research uses econometrics techniques to study significant correlation between poverty and globalization of economy and investigate mechanisms influence of globalization on poverty in the economy during the period 1984-2004.
In this context, the estimated three models discussed. In the form of a model for a significant correlation between poverty and globalization of the economy - causal relationship between these two variables - the intensity and direction of influence of globalization on poverty and other models. The mechanism described in the framework model for how to express this influence. Results of regression estimates and Granger Causality shows:
Significant positive and relationship between economic globalization and poverty ALS, global economy is one cause of poverty and Unsuccessful because of poor economic globalization is being. A positive relationship between the globalization of the economy and inflation, therefore the global economy through inflation increases poverty. A negative correlation between the globalization of the economy and unemployment. therefore .
Mostafa Salimifar; Mohammad Keivanfar
Abstract
In present paper, first the concept of informal economy and its place in the economic literature has been described. Then the causes and factors involved in providing the informal sector was examined and the volume of informal economy was estimated. Second, the effect of inflation on informal economy ...
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In present paper, first the concept of informal economy and its place in the economic literature has been described. Then the causes and factors involved in providing the informal sector was examined and the volume of informal economy was estimated. Second, the effect of inflation on informal economy was surveyed. To estimate the volume of informal sector, Residual discrepancy method was used and the volume of informal economy in urban areas in Iran economy from 1982/83 to 2008/09 was calculated. The results show the increasing trend of informal sector volume, during the imposed Iraq-Iran war. In addition, after the imposed war some fluctuation in the hidden economy has been detected. In the final part, after studying existing stationary of the used variables, the effect of inflation rate (in special groups) on the informal sector was examined by using OLS method. The results show that urban informal sector increase, if only inflation rate in the goods group grow up.
Hossein Mehrabi Boshrabadi; Habibeh Sherafatmand; Ali Akbar Baghestny
Abstract
Study of price trend in Iran, showed that general level of prices is rising continually during time. An inflation situation has effect on most economic variables. Therefore investigation of effective factors and variables on inflation is important. Exchange rate and Gap in product are factors which affect ...
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Study of price trend in Iran, showed that general level of prices is rising continually during time. An inflation situation has effect on most economic variables. Therefore investigation of effective factors and variables on inflation is important. Exchange rate and Gap in product are factors which affect inflation. In this paper the impact of exchange rate shocks and GAP on inflation in Iran’s economy with use of Hoderik Prescott filter and Kalman filter for analyzing exchange rate shocks and GAP during the time 1998:1-2007:4 in Johanson Cointegration test and VECM Model has studied. Main results indicated that, positive exchange rate shock has a negative effect and negative exchange rate shocks has a positive effect on inflation in the long run and sustainability in inflation in long run is less depended to exchange rate rather than short run. Also the Gap in gross domestic product and liquidity has a positive effect on inflation. So taking suitable exchange rate policy could be one way for controlling inflation.
