Iranian Economic Review
Volume:27 Issue: 72, Summer 2023

Over the past decades, technology has been considered as a major factor that affects economic and industrial development. The export technology content, which reflects the export goods characteristics, has also been of great importance at the international level. The export technology content influenced by knowledge which one of its sources is learning that according to economists, can be due to experience in production or export. The purpose of this paper is analyzing the learning-by-doing and investigating its impact on industrial export technology content at the level of two-digit ISIC codes in Iran’s Industries using the Arellano-Band dynamic data estimation method from 2011 to 2015. For this purpose, different indicators are used to quantify the learning and another indicator is applied to compute the export technology content. The results of this study show that learning-by-exporting influences both a country’s export composition and the export technology content more than learning-by-production. In addition, learning-by-doing has a positive and significant effect on the export technology content. Further, the variables of human capital, GDP per capita, trade openness, and Intra-industry trade index have a remarkable effect on the export technology content of two-digit ISIC codes industries.

In this paper, we study the asymmetric effect and threshold of financial development on economic growth. We present a fresh evidence using the panel threshold-ARDL (Panel-TARDL) model for the 5 BRICS countries including Brazil, Russia, India, China and South Africa. We apply the Pool Mean Group (PMG) procedure for the estimation. The findings reveal that the long run threshold and asymmetric effects of finance taking place once the credit reached 38% of GDP. The financial development significantly improve the economic growth only below the threshold point thereafter the effect becomes negative. We find no significant threshold and asymmetry in the short run. Using a 58% as a threshold, we find a negative effect of finance for both the segments of the threshold and no asymmetry is detected. These suggest that any level of credit above 38% of GDP will produce an adverse effect of finance on growth. The Policy implications of these results are also discussed.

The outbreak of COVID-19 has led to widespread use of mathematical models of epidemiology. These models have a fundamental defect, because they do not consider the interaction between economic decisions and rates of infection. Therefore, the main motivation of the present study is to understand the severity of the effect of health shock on Iran’s oil economy using a Dynamic Stochastic General Equilibrium model. After calibrating the parameters based on the quarterly information of Iran's economy during the period of 1991-2017, the adjusted model has been simulated in three scenarios, based on the persistence of health disaster risk and the deterioration of health capital due to the disease outbreak. The results show that the occurrence of a health disaster risk shock by a standard deviation caused severe fluctuations in macroeconomic and health variables. On the other hand, with the reduction of production and health status, the development path of Iran's economy has been challenged. According to the research findings, it is recommended that the government, as a policy-maker, play a stabilizing role under pandemic crises conditions.

In most studies, examining the relationship between risk and return, based on the theory of expected utility, an investor has always been considered as a risk-averse person. While the prospect theory considers both risk aversion and investor risk-taking based on existing realities. The innovation of this paper is to consider the separation of risk-taking behavior from rational one of investors (risk aversion). In this paper, the relationship between risk and return based on the prospect theory for companies of four selected industries during 2001-2020 by panel data and panel quantile regression method has been investigated. Investors' behavior in the prospect theory is sensitive to the reference point. In this paper, the average return on industry assets is considered as a reference point. Hence, the selected companies were divided into two groups of companies with asset returns (ROA) above and below the industry average. The result showed that the investor's behavioral model changed relative to the reference point. Investors are risky below the reference point, contrary to traditional theories of utility. Of course, at returns above the reference point, investors will still be risk-averse. Comparing the results of estimation of two methods (panel data and panel quantile) shows that this situation is also true in different risk quantiles. So that, the sign of the relationship between risk and return at the high and low levels of the reference point is compatible with the theoretical foundations. Therefore, the behavior of investors in selected companies follows the prospect theory.

This paper compares the effectiveness of the monetary policy based on conventional utility function and prospect theory. According to prospect theory, in the face of uncertainty, people make decisions based on perceived losses and benefits, so they are more sensitive to losses than to gains of equal size. Achieving this goal, we estimated the DSGE Model for the Iranian economy. The results of Bayesian estimation showed that under prospect theory, the inclusion of the loss-aversion component affects the household consumption behavior, the labor supply, and the real money demand. Also, The results of the Impulse-Response analysis show that an expansionary monetary shock led to an overestimate of inflation expectations due to fear of losses resulting from rising inflation. Hence, under the prospect theory, inflation increases relatively more, and the interest rate decreases with less intensity. Moreover, the more attention to the behavior of loss-aversion agents by policymakers, the less volatility is in macroeconomic variables.

Though studies related to corporate governance shaping risk management are ubiquitous, fathoming income smoothing behavior and credit quality are fundamental to commercial banks, especially pertaining to economies in transition. In this context, we used panel data of eighteen commercial banks of Pakistan including both conventional and Islamic, for the period 2007 to 2017. The concept is supplemented by ownership and board structure as apt indicators of corporate governance and deeming income smoothing and credit quality as moderators is the peculiarity of our study. Surprising to note, our risk management model outperformed regulatory capital and profitability, on the road to monitoring effectiveness. Albeit income smoothing constantly remains a matter of concern, credit quality is imperative for risk management in our case. Hence, based on the findings, practitioners are suggested to consider board meetings and block holder ownership with aplomb for monitoring effectiveness of commercial banks in Pakistan. Nonetheless, institutional ownership demands further attention.

This study aims to measure the efficiency of the general takaful operators in Malaysia with the selected inputs, labor cost and management fees. On the other hand, the output used is gross contribution. General takaful operators are the institutions governed by the Islamic Financial Services Act 2013 (IFSA). IFSA 2013 is the key statute governing the Islamic finance sector, which replaced statutes such as the Islamic Banking Act 1983 and the Takaful Act 1984. Based on the annual data gathered from 2014 to 2018 (post implementation of IFSA 2013), the efficiency is analysed using Data Envelopment Analysis (DEA) on four selected institutions in the general takaful business. DEA results show that Etiqa General Takaful Berhad, Syarikat Takaful Malaysia Am Berhad are considered as the most efficient. The rest of general takaful operators in the sample were deemed technical inefficient. The results also indicate that inefficient institutions including those with the lowest performance which are Takaful Ikhlas General Berhad and Zurich General Takaful Malaysia Berhad have inefficient management in resource utilisation. In conclusion, the findings have confirmed the market share theory and infer to the expense-preference behaviour on the part of the general takaful operator. Perhaps, the general takaful operators are posed with an expedient manner trying to satisfy their own benefits. In order to achieve full efficiency, any takaful operators have to increase its market share segments by increasing its gross income and contribution through developing demand for general takaful products and mostly on takaful product itself

The objective of this paper is to analyze and measure the systemic risk between cryptocurrencies and real currencies using a value approach in conditional risk exposure and expected marginal shortfall. Systemic risk in finance means the probability of a sudden crash of an entire financial system. This risk can lead to inconsistency or chaos in financial markets. Another important matter in the discussion of systemic risk is the contagion of risk, which is the probability of the spread of major economic changes in a country. In this research, statistical data of real and virtual currencies over the years 2015-2020 are used. For this purpose, the indices of systemic risk were calculated using CoVaR and MES, and then the correlation between the systemic risks of the evaluated currencies was created. In this analysis, the statistical data of the currencies of the exchange rate of the Pound to the Dollar, the exchange rate of the Yuan to the Dollar, the exchange rate of the Lira to the Dollar, the exchange rate of the euro to the Dollar, Bitcoin, Ethereum, Ripple, Litecoin and Ethereum Classic based on the daily price turnover of cryptocurrencies and real currencies are used. The result showed that there was a correlation between the systemic risk indices in relation to the studied currencies and virtual currencies had a lower systemic risk index than real currencies.

This study investigates the effect of currency union on intra-regional trade integrations in West Africa. The empirical analysis also examines the interaction effect of institutional quality on currency union-trade flows nexus in the West African region over the period of 1996-2019.The study employs a Driscoll-Kraay standard error estimator technique on data obtained from the IMF direction of trade statistics and World Bank governance indicators. The study findings suggest that all the gravity variables (Gross domestic product, population, and distance) are in line with a priori expectations; currency union dummy produced a positive association with intra-regional trade integrations; real effective exchange rate appreciation boosts trade performance, and the interaction of currency union and institutional quality produced a positive impact on intra-regional trade flows among the countries in the West African region. Among the disaggregated institutional quality index, the rule of law and political stability have a significant impact on trade flows. The rule of law influenced trade flows positively, while political stability influenced trade flows negatively. The study concludes that the Rose effect of a common currency on trade exists in West Africa and that the level of institutional quality also subscribes to the currency union trade flows relationship.

Health development is an effort to fulfill one of the fundamental rights to access good health services. Life expectancy marks the success of development in the health sector. We carefully selected the determinants of life expectancy in Indonesia and collected data in 2010-2018. All 34 provinces in Indonesia were included as the unit of analysis. We use panel data modeling. We carried out a cluster analysis to develop an inter-provincial cooperation group in Indonesia. Life expectancy shows a strong correlation with GRDP per capita, immunization, mean years of schooling, and insurance. GRDP per capita being the strongest of all constructions. Rights, democracy, poverty, Gini index, dependency ratio, illiteracy, and breastfeeding harm life expectancy. Beds, resources, water, toilet, sanitation, and neonatal have a weak influence on life expectancy. The novelty of this paper is to incorporate the impact of health infrastructure development, political regime, and socioeconomic status, and the cluster of provinces that can increase life expectancy. Studies in full democracies prove that politics has a significant on life expectancy. However, this is not confirmed when Indonesia's democracy index from political rights aspects and institutions of democracy aspects is used to see its impact on life expectancy. This study may be the first to look at the effects of health infrastructure development, political regime, socioeconomic status, and clustering in 34 provinces in Indonesia. The results of this study may be helpful for policymakers, and efforts need to be made to ensure a healthy life and support well-being for all ages.

This study aims to examine the impact of financial inclusion shocks on financial cycles, emphasizing financial stability in 73 developing and developed countries over the period 2005-2020. Impulse response functions and Granger causality in the form of a Panel Vector Autoregression (PVAR) have been investigated to analyze the models. At first, the results show that low-level financial inclusion initially reduces financial and credit cycles, but after increasing the financial inclusion level, this negative effect becomes positive and improves financial cycles. Additionally, financial stability can improve financial cycles. Finally, a positive shock from both indicators of the financial cycle increases the variable itself, and the effect of this shock is decreasing. Moreover, the Granger causality test results show a two-way causal relationship between the financial cycle and financial inclusion in both models. Both models show a two-way causal relationship between the financial cycle and financial stability. There is also a one-way causal relationship from financial stability to the financial cycle and financial stability variables. In other words, it can be argued that the variables of the financial cycle, financial inclusion, and financial stability are the Granger causality of each other in the selected countries.

Using the daily data of returns of 9 assets during the period from 04/29/2013 to 09/20/2021, the volatilities of different asset markets were modeled in this paper. The multivariate factor stochastic volatility model (MFSV) under the nonlinear space-state approach provides the basis for decomposing asset return volatility into two components, “volatility rooted in latent factors” and “idiosyncratic volatility”, and for estimating the time-varying pairwise correlation of time series. The results show: First, there are three latent factors so that the volatility of returns of five Iranian stock markets is affected by the first and third hidden factors, while the volatility of the other four international markets is mainly affected by the second latent factor. Second, the idiosyncratic volatility of the different Iranian stock returns exhibits clustering behavior, and there is a relatively strong correlation among them. Third, the volatility of oil returns is explained by the hidden factors, and consequently their idiosyncratic volatility is almost smooth. Fourth, the correlations between the return volatility of bitcoin and the volatilities of other conventional assets are negligible. The results of this paper may be useful for future research on investment opportunities and risk-return characteristics of portfolios.

The present study investigates the effect of oil resource rent on financial development through the stock market. In this case, the analysis process has been accomplished in two different states: considering and ignoring the institutional quality index in oil resource rent at the values above and below the financial development threshold. The threshold structural vector autoregression (TSVAR) model has been employed to analyze the stock markets in Norway and Brazil from 1984 to 2019. In Brazil, by ignoring the institutional quality index, the resource curse hypothesis is confirmed at the values below the financial development threshold. If the institutional quality index increases, the positive oil rent shock leads to the increment of financial development through the stock market. Therefore, the hypothesis of the resource curse is rejected in this country. In Norway, by ignoring the institutional quality, the resource curse hypothesis is confirmed at the values above the financial development threshold. If the institutional quality is considered in oil rent, a positive shock to oil rent reduces the financial development through the stock market in a short-term period. This situation increases the financial development through the stock market in a long-term period. As a result, an increase in institutional quality contradicts the resource curse hypothesis at the values above the threshold level. In Norway, if the institutional quality in oil rent is considered, a positive shock to oil rent enhances financial development through the stock market at values below the threshold.

Monetary policy tools change from one country to another based on their legal and fiscal status. It is necessary to have models to understand monetary variables that affecting the economy of the country. This research study aims to evaluate the monetary variable shocks which affect the Sri Lankan economy. Five Structural Vector Autoregressive models called generic model, bank lending model, money effect model, exchange rate model and composite model were generated to evaluate the impacts of Sri Lankan Economy by the monetary variables Gross Domestic Product, Consumer Price Index, Reserve Money, Commercial Bank Loan, Money Supply, Bank Rate and Exchange Rate. It was found that, necessary action to be taken to implement appropriate monetary policies to keep gross domestic product in a progressive path. And keeping gross domestic product in a progressive path will lead Sri Lankan currency to appreciate against US dollar. Implementation of strong monetary policies to monitor bank rates and commercial bank loans closely will lead progressive economic growth.

This study analyzes absolute and conditional income mobility in Iran using pseudo-panel data constructed from 22 cross-sectional Household Surveys of Income and Expenditures conducted by the Statistical Center of Iran between 1999 and 2020. The findings indicate that households with below-average income experienced faster income growth than households with above-average income, suggesting income convergence over the past two decades. However, it is important to note that some of this convergence may be attributed to international sanctions imposed between 2007 and 2014. These sanctions resulted in reduced income across all income groups, particularly affecting the top-income groups. Consequently, there was a significant decrease in income disparity between the wealthy and the poor, potentially leading to an inflation of measured income mobility. Absolute mobility is found to be high in both total income and total expenditures. Individuals displayed considerable mobility around their fixed effects, demonstrating a quick recovery from negative income shocks and low initial income endowments. Urban areas exhibited higher income mobility than rural areas.