Studying the Causality between Growth of Total Factor Productivity and Economic Growth(Case Study Commerce Sector)

This study examines the relationship between productivity growth and commerce sector growth during the period of 1981-2007 and examines empirically the causal link between productivity growth and commerce sector growth in Iran using unit root and co- integration techniques within a bi-variate vector auto– regressive (bVAR) and Vector Error Correction (VEC) framework. The results reveal a positive relationship between Productivity growth and commerce sector growth for Iran with the direction of causation running from productivity to commerce sector growth.