Iranian Economic Review
Volume:14 Issue: 23, Spring 2009

Energy is an indispensable input for economic activity. Although capital and labor have widely been used as the production factors of many countries production function, but there is little body of literatures which has used the energy as a production factor in Iran. To the importance of energy factor in production process, in this study, the energy factor is entered in the long-run Iran’s agriculture sector and total economy production functions. Also, the Cobb-Douglas production function and Auto-Regression Distributed Lag (ARDL) approach are used for estimating the long-run production functions. Results show that the production elasticities of labor, capital and energy factors of Iran’s agriculture sector are 0.36, 0.23 and 0.32, respectively. Beside, the production elasticities of labor, last year capital and energy factors of Iran’s total economy are 0.55, 0.46 and 1.17, respectively.

The first paper empirically investigates the relationship between banks, stock market 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 testing procedures in the context of Error Correction Models (ECM). The findings suggest that in our case study banks affect economic growth mainly through the capital accumulation channel. While, it appears that the stock market does cause growth only through the productivity channel. In contrast, the feedback effect, running causality from growth to finance, was found significant only for the stock market development. Generally, these results strongly support the supply-leading view.

This paper analyses the interdependence between information and energy segments of the Iranian and Indian economies. The Iranian economy is an energy-based resource exporting economy and the Indian economy is a non-resource energy importing economy. Despite the diversified structures, informatization of the two economies appears to be a common goal for structural changes in the two countries. The main objective of this paper is to quantify the informatization of the two economies. The informatization is considered in terms of structural changes with respect to trend substitution between information and energy segments using macroeconomic approach. For this purpose we use two sets of IOTS: 1991-2001 for Iran and 1994-1999 for India. The overall results reveal substitution trend between information and energy segments of the Indian economy which means energy saving whereas a complementary trends is observed for the Iranian economy which mean the absence of energy saving.

Decision making and investors’ behavior are affected by various factors in Tehran stock exchange. Based on theoretical perspective; investors collect the key information of decision making by study of the macro and micro levels of investment environments. In order to analyze the research data, path analysis and LISREL software are used. The results indicate that political factors with 62%, psychological factors with 53%, economic factors with 47% and internal factors with 31% are the most important factors that affect the stocks trading in Tehran Stock Exchange. Not only political and psychological factors have direct effect, but also they affect the investor's financial decision making indirectly (through intended interest rate) 16% and 11%, respectively. Total effect of political and psychological factors on investors financial decision making are 79% and 64%, respectively.

This article is a contribution to the theory and empirics of rent seeking, labor exploitation and industrial profitability. We measure the interest rate rent, labor exploitation and technological progress. The profitability and accumulation in industries is derived from a simple mathematical model. The interest rate rent and labor exploitation are two important factors of industrial growth in Iran. Also, the estimated profits of industries are very high which further industrial growth. We have estimated the variables in a panel of industrial sectors and proved a positive correlation between value added in industries and interest rate rent, exploitation and profitability, such that each one percent increase in interest rate rent causes value added to increase by 1.5 percent. We have extended the results to a debate on political economy of Iran and the economic history of the country and reached some conclusions regarding the devastation of Iranian industrial base in 18 and 19 century.

With the growth of competition due to globalization and continued process of EU enlargement, economic diversification is a topic of increasing interest in the Euro-Med region for promoting economic growth and stability. There are two competing hypotheses. One hypothesis argues that in a diversified economy risk is spread more evenly across a number of industries, and makes it more resilient to external events and developments, reducing instability. Another hypothesis argues that specialization is key to growth and production and export diversification. The objective of this paper is to investigate the differences in export diversification patterns between European and Mediterranean sides, using panel data for 1995-2004 periods. The estimation results obtained indicated that export diversification in the Euro-Med region as a whole has had favorable impact upon their economic growth rates and has reduced the instability in their economic performance.

There are vast literature about the relationship between financial development and economic growth. In most studies, the positive relation is approved while in few advocate that there is no relation. The positive relation may be from financial development to growth or vice versa or two ways. In this paper, the Granger causality relationship between financial development and economic growth is studied by the dynamic panel GMM-SYS approach and with two kinds of data, annual and five-non-overlapping data in MENA countries as a group. Five different measures of financial deepening are used to capture the variety of different channels through which financial development can affect growth. Results imply that a strong bi-directional causality between financial development and economic growth, but the relation from economic growth to financial development is stronger than vice versa direction.

In this paper we argue about the determinants that influence the process of financial market integration in the East Asia-Pacific region. We question whether GDP, Exchange rate and real interest rate influence the financial integration. We construct a regression specification with respect to a probit/tobit panel model for our data set of the selected East Asia-Pacific countries over the 1990–2005 period. Generally, we find that macroeconomic indicators of the members are associated with higher or lower probability of integrating their financial markets and GDP has a positive effect on financial integration, while the results related to exchange rate and interest rate are ambiguous. The implication is that the elimination of exchange rate risk within the East Asia-Pacific region means the common currency, which reduces the remaining differences of investment and consumption opportunities across the member countries of the East Asia-Pacific during the implementation of financial integration.