Monetary & Financial Economics

Abstract Economic growth, as one of the most important indicators of a country’s economic performance, reflects a sustained increase in the level of welfare and is influenced by a set of macroeconomic variables. The present study investigates the dynamic effects of foreign direct investment (FDI) and trade openness on economic growth and energy consumption in Iran over the time period from 1990 to 2023. The research methodology is based on the ARDL (Autoregressive Distributed Lag) approach, with the following variables under investigation: Gross Domestic Product (GDP), energy consumption, foreign direct investment, trade openness index, oil rents, inflation rate, and exchange rate. The main findings of the study indicate that foreign direct investment, the trade openness index, and oil rents have positive and statistically significant impacts on economic growth in both the long-run and short-run (with smaller coefficients in the short-run). Additionally, FDI and trade openness exert a stimulating (positive and significant) effect on energy consumption in the long-run, although this impact is weaker in the short-term. Control variables such as inflation rate and exchange rate also play a significant (negative and meaningful) role in determining the pattern of energy consumption. Based on these findings, it is recommended that attracting foreign capital and increasing trade openness should be considered among the key strategies for achieving sustainable economic growth and managing energy consumption in Iran. Policymakers should create an enabling environment for attracting foreign investment and facilitating international trade, while simultaneously placing energy consumption management programs on the agenda to strengthen economic growth.

Abstract In this study, a Dynamic Stochastic General Equilibrium (DSGE) model is developed to investigate the effects of exchange rate shocks on optimal monetary policy and the stock market in Iran. The model captures key features of the Iranian economy and simulates interactions among households, firms, the government, and the central bank. It analyzes the effects of shocks to total factor productivity, exchange rates, government oil revenues, and current government expenditures. Simulation results indicate that exchange rate shocks significantly influence macroeconomic variables, generating fluctuations in stock market returns and adjustments in optimal monetary policy. Strengthening the weight of inflation targeting in the monetary policy rule mitigates the negative impact of exchange rate shocks on output and stock market performance, although it imposes additional pressure on interest rates, potentially affecting capital market dynamics. The findings reveal complex and multidimensional relationships between exchange rates, monetary policy, and the stock market, highlighting the importance of carefully coordinated policy design for economic stability. This study provides both quantitative and qualitative insights into Iran’s economic mechanisms and offers guidance for formulating optimal policies under exchange rate volatility.

Abstract Precious metals serve as safe-haven assets during economic crises, playing a pivotal role in the reallocation of capital from stock markets. Influenced by factors such as inflation, economic uncertainty, monetary policies, and geopolitical events, these metals exert either positive or negative effects on stock indices. This study aims to investigate the impact of gold and silver price volatility on the stock indices of selected Islamic countries over the period from 2006 to 2022. Employing a quantitative methodology grounded in econometric models, the research adopts a hybrid approach integrating quantile regression with wavelet transforms to analyze the distributional properties of variables across quantiles and temporal scales (short-term, medium-term, and long-term).
The findings reveal that fluctuations in gold and silver prices have a direct and statistically significant influence on the stock indices of the selected countries. Wavelet coherence analysis indicates an overall in-phase relationship among the variables: in the short term, stock indices exhibit leading behavior; in the medium term, gold and silver take the lead; and in the long term, correlations diminish. Quantile regression results highlight variations across wavelet scales, with D1 showing stronger effects in higher quantiles, D2 demonstrating greater stability, and D3 exhibiting weaker impacts. A similar pattern, albeit with reduced intensity, is observed for silver. Consequently, these volatility dynamics aid policymakers in formulating fiscal policies and assist investors in risk management. Recommendations include multi-scale analyses for forecasting, mitigating dependencies on price fluctuations, and developing novel financial instruments. This research addresses a gap in the literature on Islamic countries and introduces methodological innovations

Abstract The aim of this study is to study the effects of oil price shocks on exchange rates and economic growth using a vector autoregressive model with time-varying coefficients. One of the most important debates and challenges in macroeconomics is the effects of oil price fluctuations on macroeconomic variables. Since oil price fluctuations affect both the demand side of the total economy and the supply side of the economy, studying its effects on the level of production and prices is very important and can provide appropriate policy recommendations for managing the demand side of the country's economy. In this regard, an important and noteworthy point is that the manner and extent of the impact of oil price fluctuations on economic activities depends on the initial conditions of the country's economy and, therefore, can have different effects. In this study, the TVP-VAR model method was used in the period 1972-2022 based on the frequency of seasonal data to analyze the results. The results of this study indicated that the shock from the oil price increase led to an increase in economic growth and the impact coefficient in this model varied over time and led to a fluctuating response of this variable over time. On the other hand, it was observed that the shock related to the oil price increase led to a decrease in the exchange rate and the estimated coefficient in this model was also in a way that expressed the variability of the response between the variables.

Abstract Governments are constantly influenced by political parties with differing orientations, which creates the potential for political misuse of monetary policy. Such interference can disrupt monetary equilibrium, harm the real sector of the economy, and ultimately lead to economic fluctuations. Consequently, central bank independence is widely recognized in the economic literature as one of the most important institutional tools for controlling inflation. This study investigates the impact of central bank independence on inflation in selected oil-exporting countries over the period 2000–2023, while considering the role of institutional factors and financial systems. To address potential endogeneity concerns, the two-stage least squares (2SLS) method is employed. The findings indicate that central bank independence and institutional quality play a pivotal role in reducing inflation; however, the interaction between institutional and financial variables can generate complex and sometimes nonlinear effects. Accordingly, strengthening the practical and legal independence of central banks is recommended to curb inflation and enhance macroeconomic stability.

Abstract A stable financial system plays a critical role in facilitating the flow of funds from savers to investors and optimal allocation of scarce resources to productive economic activities. Any disruption in the functioning of this system can jeopardize these essential objectives. Economic uncertainty, as a key factor affecting economic decision-making, has always been the focus of policymakers. This study aims to provide a comprehensive analysis by calculating an uncertainty index arising from Iran's economic policies (including monetary and exchange rate policies) during the period 1981–2022 using the GARCH model and the OECD’s ten-step methodology. Furthermore, the relationship between the economic policy uncertainty index and the financial stability index was examined using the Markov Switching model. Key variables affecting monetary policy uncertainty include interest rate, money supply growth rate, inflation rate, central bank independence, and government fiscal health, while the key variable for exchange rate policy uncertainty is the real exchange rate. The financial stability index was constructed using variables such as liquidity, capital adequacy ratio, bank credit to the private sector, deposit interest rates, stock market index, and exchange rate. The findings reveal that EPU1 primarily reflects domestic economic fluctuations, while EPU2 is more sensitive to international shocks like sanctions. During financial instability, external shocks dominate, whereas both domestic and external uncertainties pose threats during stable periods, highlighting the need for adaptive policy measures to maintain financial stability in Iran's economy."

Abstract With the expansion of computational and simulation capacities, factor-based models have also found a special place in the economics literature. Unlike theoretical models that mainly focus on maintaining theoretical frameworks, these models have the ability to explain the behavior of economic agents without considering the representative agent assumption and other cumbersome assumptions far from reality. In this article, while describing the economic conditions after the sanctions shock, with the agent-based modeling method to simulate and evaluate the behavior of the economic factors effective in the currency structure of Iran after the sanctions shock caused by the withdrawal of the United States from the JCPOA NetLogo software has been paid. Considering that at least three exchange rates are created after the shock of the sanctions, the results show that there are at least four policy bottlenecks in front of the currency policymaker in this situation: a) the amount of reserves of the central bank b) the volume of activities Speculative c) The gap between the policy rate and the unofficial market rate of the currency d) The length of time period of the adjustment of the policy rate of the currency by the central bank. The lower the amount of foreign currency and gold reserves available to the central bank, the more speculative activities, the greater the gap between the policy rate and the informal market rate of the currency, and the shorter the period of adjustment of the policy rate by the central bank, the jumps The exchange rate and currency fluctuations will be more severe, so that the central bank may lose all its capacity and foreign reserves as a result of interventions, and with the complete inactivity of this bank, the sanctioned country will leave the stability of the currency system and falls into the abyss of currency crisis.

Abstract   1- INTRODUCTION The financial crisis of the last decade has impacted financial markets significantly and has led to a remarkable reduction in the financing through the issuance of shares by companies and financial institutions. Additionally, it has given rise to an increase in the amount of debt in capital structure of companies; therefore, many companies are unable to repay their debts during the of crisis, exposing companies to financial distress and opportunistic behaviors   2- THEORETICAL FRAMEWORK  With the occurrence of the global financial crisis, the price of metals, oil, and including the country's oil revenues will decrease, which will initially cause a budget deficit through the reduction of government revenues. With the decrease in government revenues, the amount of government expenditures decreases, and the result is a decrease in investment and a decrease in demand, and the creation of economic imbalances, including recession in the economy. that this effect on exporting companies is more tangible due to the reduction of the general level of prices in the world markets; As a result, warehousing costs and other costs in these companies increase and they face the problem of lack of liquidity; On the other hand, it lowers investors' expectations of the growth and profitability of these companies, which ultimately increases the possibility of not being able to repay the interest and principal of debts. As a result, capital gains in investment companies decrease and put the companies on the verge of financial helplessness. When companies are on the verge of financial helplessness, they may take profit management in order to deal with the crisis and not lose shareholders, in order to make their situation more stable. Also, the management can influence the company's profit through optional accrual items in ways such as early recognition of revenues or postponing the recognition of expenses. What draws the attention of experts to the quality of accruals as an indicator of the quality of profit; The information content of accrual items components, in other words, the separation of accrual items components can provide information about the company's performance, but the market reacts to this information slowly; Therefore, the components of accruals can be considered as an indicator for determining the improvement or deterioration of the company. The aim of this study is the investigation of the impact of the global economic crisis on financial distress, earning management, and the pricing of accruals of companies listed on the Tehran Stock Exchange.   3- METHODOLOGY The multivariate regression model and combined data were used to analyze the data and test the hypotheses. In order to show the explanatory power of the variables and to evaluate their importance, paired t-test was used. To test these effects, 104 companies listed on the Tehran Stock Exchange during the period 2008 to 2020 were studied.   4- RESULTS & DISCUSSION There is a significant difference between financial helplessness during the period of the global financial crisis and the period after it; therefore, it can be expected that the global financial crisis will expose companies to financial helplessness and even bankruptcy. There is a significant difference between profit management during the global financial crisis and the period after it; when a company is exposed to a financial crisis, the company's management is affected by reducing its rewards, changing management and losing its reputation. Companies to secure financing and attract investors by making the financial performance of companies attractive during the period of financial crises. , have enough motivation to hide the deteriorating performance of the company by resorting to accounting choices, and finally, there is a significant difference between the pricing of accruals during the global financial crisis period and the period after it; Therefore, during the period of the global financial crisis, managers who try to manage profits to hide the dire situation of the company, there is an incentive for them to do this through the manipulation of discretionary accruals that are part of the net profit.   5- CONCLUSIONS & SUGGESTIONS The findings of this study indicate the impact of the global financial crisis on the financial performance of companies and put them on the verge of financial distress. This occurs due to the inability of financing and as well as the motivation of managers to hide the deteriorating performance of the company by taking measures such as earning management and the pricing of accruals increases. Therefore, during the period of the global financial crisis, managers who attempt to manage profits to hide the dire situation of the company, have the incentive to do so by manipulating discretionary accruals that are part of net profit; Because accruals provide information about the company's performance and because it is an indicator to determine the improvement or deterioration of the company, there is always the motivation to manipulate it within the framework of accounting principles through the time of recognition of revenues and expenses as a tool for managing profits by management.