فرزانه احمدیان یزدی

The Covid-19 pandemic has well illustrated the extent to which the health crisis can negatively affect the economic activities of oil-exporting countries. Empirical evidence confirms that global oil prices and global demand for this commodity are the two key channels of the disease's impact on the economies of such countries. Given the high importance of this issue, this study examines the effects of this disease on US oil demand (as an indicator of world oil demand) and the West Texas price index (as an indicator of world oil prices), based on weekly data from June 14, 2019 to May 15, 2020. For this purpose, an autoregressive distributed lag model (ARDL) has been used, and thus the impact of Covid-19 on oil demand and the oil price index in both short-term and long-term has been studied. According to the findings of this study, Covid-19 had a negative and significant effect both in the long run and in the short run on the global oil price index and global oil demand. Also, regard to the results of the causality test based on the VECM model, a strong long-term causality from the global oil price index to the Iranian oil price has been confirmed. Therefore, it can be argued that Covid-19 has a strong negative impact on Iran's crude oil price index throughout affecting global crude oil price in the long run. Therefore, in order to avoid budget deficits and hyperinflation in Iran, oil-independent budget should be seriously considered by policy makers.

Resources Curse or blessing? This is a problem that has been a significant contribution to theoretical discussions and applied studies in natural resource-rich countries for over half a century. In fact, it is important to know that can resources rents stimulate physical capital accumulation and whether financial development can lead to it?  In this article we have investigated the effect of multi-dimensional and seven individual indices of financial development on how resources rents affect physical capital in Iran during 1970–2014, using ARDL Rolling model. The results show that with the increase of the multi-dimensional index and most of the individual indices of financial development, the effect of resources rents on physical capital accumulation has improved in both short- and long-run. In fact, financial development has increased the absorption capacity of these resources in the economy and reduced the vulnerability of the Iranian economy to fluctuations in natural resource sales. These results confirm the need to strengthen the financial system to transform natural capital to physical capital.

While the literature on the role of the financial development on economic growth and development is still expanding, there seems to be a definite consensus among economists regarding its positive impact on economic growth (Beck et al., 2000). This positive impact has led to the formation of researches in this field that have focused on the central role of financial development in the economies of countries.The importance of financial development is particularly important in countries that try to get benefits from the sale of natural resources, as they have failed to get advantages from the benefits of managing these resources in order to achieve sustainable economic growth. According International Monetary Fund (2010), if natural resourcerich developing countries develop their financial systems they will be successful in managing these windfalls. So, they can increase the economy’s absorption capacity of natural resources revenues and stay away from any potential negative effects.

The process of Economic growth in natural resource-rich countries focuses on the development of the financial system through four basic ways, namely the transforming of natural capital into four forms of capital, whether tangible (including foreign capital and physical capital) and intangible (including human capital and social capital). Given the particular importance of intangible capital to sustainable economic growth (World Bank, 2012), this article focuses on generalized trust (as an indicator of social capital).In fact, trust between individuals or between individuals and institutions is manifested by sharing information and social norms, and its higher levels are associated with more productive individuals and consequently higher economic growth (Elkhuizen, 2016: 6). Algan and Cahuc (2010) state that trust is one of the key determinants of economic development in all countries. They argue that generalized trust is the main factor to success in achieving economic development (Algan and Cahuc, 2010: 2060). Numerous empirical studies in the field of political science have focused mainly on the pivotal role of trust as an indicator of social capital in economic growth and development (Banfield, 1985; Arrow, 1972; Gambetta, 1988; Coleman, 1990; Greif, 1993; Fukuyama, 1995; and Putnam, 2000).Given the key role of financial system development in achieving sustainable economic growth in resource-rich countries, and on the other hand, the high importance that public confidence plays in achieving the above objective, an important question arises: "Can financial development leads to getting benefits from natural resources revenues in the way of increasing augmented trust in the economy? ". In fact, what is referred to in the literature to the curse of natural resources is related to the negative impact of resources rents on the formation of various forms of capital. So, in countries that have been able to manage these revenues through financial development, the negative impact of natural resources have not been seen (Van der Ploege, 2010). Thus the existence of some natural resource-rich countries that through their developed financial systems have been able to properly manage the sources and inflows of their natural resource revenues and achieve significant economic growth (such as Norway, Australia and The Netherlands), can lead to proposing as an operational model for many resource-rich developing countries, including Iran.

Overall, from a policy perspective, it is important to understand the impacts of natural resource rents on augmented trust and whether this (positive or negative) effects will be improved through a well-developed financial institutions? In the present paper, in order to answer the basic question of this study, first, macroeconomic indicators that affect augmented trust are identified and then to study the impact of financial system development (in the banking sector) on how these rent affect augmented trust, the rolling regression technique (with fixed windows) based on the ARDL method is applied during the period 1970-2014 in Iran.

The results of the model estimation show that the multidimensional development of the financial system in the banking sector has the potential to improve the impact of natural resource rent on public confidence in Iran. Therefore, the development of the financial system as a key structural policy is recommended for positive utilization of natural resources in Iran.

From a policy perspective, it can be said that given the potential of the financial banking system for getting positive utilization of the rents from natural resources in order to increase augmented trust, special attention should be paid to the factors driving the financial development in Iran. Of course, regard to the flaws in the system, such as the existence of financial repression, the existence of suboptimal controls, and the lack of competitive space among financial intermediaries, we could say that if the obstacles against financial development are eliminated, it can be seen its improving effects on converting natural resources income into social capital accumulation and achieving sustainable growth and development. In this regard, policymakers should pay particular attention to the main channels of financial development in order to enhance the role of it on how resources rents affect generalized trust.

Financial development is a key determinant of economic growth and development. This is more important in the case of resource-rich developing countries; because if they achieve high level of financial development, they will get benefit from resources in order to access sustainable growth and development. With regard to importance of this issue, the impact of financial development on conversion of natural resource rents into foreign capital in Iran has been studied during 1970-2014. The results of our ARDL model show that natural resources have positive effect on foreign capital in both short-run and long-run. Also, the results of rolling ARDL regression in the case of multi-dimension financial development index indicate that financial development has failed to materialize its potential effect to improve the impact of natural resources on foreign capital accumulation in both short-run and long-run. The outcome of regression based on single-dimension financial development indices suggests that some of these indices have been able to increase the positive effect of natural resources on foreign capital accumulation. However, there are no observable beneficial effects in the long-run. It seems that the lack of attention to financial development channels such as foreign financial liberalization, as well as financial repression during a long period of time, has been the main cause of this phenomenon in Iran.

Natural resources generate the major part of national wealth in resource-rich developing countries. Based on economic theories, if natural resource rents are reinvested continuously in other forms of capital, such countries can benefit from these resources. Thus, examining the mechanism of how to rents affect economic growth through capital accumulation channels is of great importance. Because of the importance of management of resource rents in achieving sustainable growth and development in resource-rich countries, this paper investigates the impacts of resource rents on accumulation of four kinds of capital (foreign, physical, human and social capital) in Iran during 1970-2014. To this end, a simultaneous equations system consisting of various capital forms is designed, and estimated by using Seemingly Unrelated Regression estimator. According to the findings, resource rents have positive effects on accumulation of foreign, human and social capital in Iran. But it is of negative effect on accumulation of physical capital. The results show that physical capital is affected by natural resource rents more than other kinds of capital. This is because of unproductive government investments in physical capital, hence not only resource rents increase physical capital but also they affect physical capital negatively.

IntroductionFinancial system is fundamental for economic growth in most of countries. Based on vast studies done on the determinants of economic growth, financial development leads to economic growth in many countries in long time (Rousseau & Wachtel, 2002). It is worth noting that the importance of financial system in economic growth has been notified for many years (e.g., Bagehot, 1873; Hicks, 1969; McKinnon & Shaw, 1973; King & Levin, 1993; Levin, 1997, 2002; Beck, Demirguc-Kunt & Levine 2000; Aizenman, 2015).
Although there is a vast literature about the importance of financial development, most of them have investigated the direct impact of financial development on economic growth. In this case it is important to know that there are four main channels that contribute to the relationship between financial development and overall economic output that are foreign capital, physical capital, human capital, and social capital. Based on World Bank’s analysis (2012), these five kinds of capital form national wealth in all economies. Meanwhile natural capital has the main role in resource-rich countries.
There is an expanding literature that shows the effects on natural resource rents on economic growth in resource-rich countries. Gylfason (2001) introduced four main channels that consist of four kinds of capital mentioned above to show how resource rents affect economic growth.
One of the important issues that have been neglected in this concept is how resource-rich countries can reverse the negative effects or improve the positive effects of resource rents on capital accumulation. There are few studies that argue financial development is an effective solution for that aim.
2) Theoretical Framework
Four kinds of capital that contribute to the relationship between resource rents and economic growth are foreign capital, physical capital, human capital and social capital. In fact natural capital will affect them in all resource-rich countries. Hence, the first step is to investigate the simultaneous effects of natural capital on other kinds of capital.
The conceptual model of this paper is that financial development is an infrastructure that has potential in improving the positive (or reducing negative) impact of natural resources on all kinds of capital accumulation. Therefore, the second step of this study is investigating the role of financial development on the effects of natural resources on accumulation of this kind of capital.
In this paper, we will show that financial development could absorb resource rents in order to allocate resources and invest them in most optimal projects. For more details it would be necessary to say that the debate about the influence of financial development on economic growth has been ongoing for more than a century. Since Schumpeter (1912) believed that financial development affects economic activity and hence economic growth. In fact, financial development has emerged as one of the policy levers central banks and governments use to target economic growth.
In fact, financial development is based on the financial development index which provides a measure for the breadth, depth and efficiency of financial systems. Generally, financial development is the factors, policies and institutions that lead to effective financial intermediation and markets, as well as deep and broad access to capital and financial services. To achieve a coherent view about financial development it would be necessary to know the main financial system functions. These are:Facilitating the trading, hedging, diversifying and pooling of the risks;
Allocating financial resources;
Monitoring managers and exerting corporate control;
Mobilizing savings;
Facilitating the exchange of goods and services (Levine, 1997).
Governments in developing resource-rich countries in order to achieve the optimal use of resource rents could stimulate financial development through some macroeconomic policies (Huang, 2010). One of the probable results of financial development is to smooth consumption of below-ground wealth across generations. Other consequence of financial development will be seen in isolating government budgets from volatile resource prices, allowing the budgetary process to be conducted with more certainty.
MethodologyThis paper provides a model for investigating the simultaneous effects of natural resource rents on four kinds of capital accumulation using SUR model. In second step, for investigating the role of financial development index on the effects of natural resource rents on all kinds of capital, we have utilized Rolling Regression technique. This method is suitable for testing the effects of one variable on two other variables in a model. Also, it is worth noting that the multi-dimension financial development index that consists of 8 main financial indices in banking sector is made by PCA method.
Results and DiscussionBased on the results of SUR estimator, resource rent has positive effect on foreign and social capital but it has negative effect on physical capital. There are various effects from resource rents on human capital accumulation; sometimes, it has positive and sometimes it has negative effect. It shows that natural resource rents have different effect on each kinds of capital accumulation in Iran during 15 rolling regression (fixed) windows that have 30 observations for each variable in one window. As is evident in this paper, the total natural resource rents itself is not a curse for the economy, but it could be a blessing. One of the important reasons for the negative effect of resources on physical capital is more governmental investments in this sector and there are some rent-seeking activities that prevent resources from mobilizing to productive projects.
The results of rolling regression show that the development of financial banking system can improve the effects of resource rents on physical and social capital in Iran. But we do not get the same results for foreign capital and human capital. In foreign capital sector, ignoring the development of external dimension of financial banking system that may be seen as financial liberalization is one of the main reasons for this event.
The reason for undesirable effect of financial development in human capital sector relates to low level of financial innovation in banking sector and high level of risks that banks are faced with. Consequently, many innovative projects from people who have high level of human capital accumulation will not be considered in Iran.
Conclusion and SuggestionsNatural resource management is one of the important issues in resource-rich countries. Based on the results, financial development can mitigate the negative effect or improve the positive effects of these rents on capital accumulation. The results show that financial development would be beneficial for this aim in physical and social capital sector in Iran. But it cannot improve the effects of resource rents on foreign and human capital accumulation.
Based on the results, we could suggest that considering development of financial system is a necessity in resource-rich countries such as Iran. Meanwhile the important issue is focusing on all financial development channels that lead to balanced development in financial system. Also, it is worth noting that policy makers should avoid financial repression because this would prevent it from imposing positive effects on the economy. At the end, we could say that paying attention to all kinds of capital would lead to sustainable economic growth when it is accompanied by stable financial development.

Experts differ between inherited and acquired abilities, but only the latter differ among countries. Human capital analysis deals with acquired capabilities which are developed through formal and informal education at school and at home and through training, experience and mobility in labor market. Based on researches, human capital is the main transmission channel that affects economic growth in the presence of natural resources. It can improve economic growth through its main channels that are higher productivity and higher quality of labor force. The mechanism of this issue is that higher human capital accumulation, as an intangible capital, leads to more efficient use of produced and natural capital. Based on the facts, the intangible capital (such as human capital) makes up a large share of total wealth, an estimated 60-80 percent, in most countries. However, unless we understand more about the composition of intangible wealth, governments may be tempted to conclude that a wide range of public expenditures are somehow yielding intangible benefits. One of the key factors of intangible capital is education and it can help government doing its economic policies more successfully.

Study about the effect of natural resource abundance is one of the important issues especially in developing countries. This study is investigated effective factors on human capital accumulation in Iran with emphasize on oil rent in the framework ARDL model during the period 1971-2012. To investigate this relationship، the ratio of oil rent as a percent of GDP، as an indicator of the resource abundance is defined and other variable like population، GDP، domestic investment and Government''s expenditure are used as control variables. Based on the results، resource abundance and domestic investment have negative effect on human capital accumulation in Iran. Also the results indicates that population and economic growth have positive effect on human capital accumulation that is accommodate with the theoretical literature.

This paper investigates the effects of trade liberalization and economic growth on non-oil bilateral trade balance of Iran and China over the period 1981-2012. For checking the stationarity of the variables and validity of the obtained results, the Augmented Dicky-Fuller test (ADF) and Perrone structural break test is employed respectively. To estimate the coefficients of the variables, ARDL model has been used. Using the framework of Oskooee and Brooks model, the findings of this paper show that increasing trade liberalization in short run and long run causes trade deficit for Iran. It means that from the view of demand side economists, higher trade liberalization deteriorates the trade balance of the country. Also, based on the obtained results, economic growth in both short run and long run has negative effect on non-oil bilateral trade balance of Iran and China. In addition, the real exchange rate has positive effect on the trade balance of Iran. It means that depreciation of national currency improves trade balance of Iran.

The article has studied the relationship between Non-oil trade balance of Iran and real exchange rate, base on Rose and Yellen corrected model, by using annual data during period 1970 - 2007.Firstly, in order to investigate stationarity of the variables, the augmented Dicky-Fuller test has been used, and to check the validity of the Dicky-Fuller test, Perrone structural break test has also been applied. Moreove, in order to determine the long-run relationships and short-run dynamics between non-oil trade balance and real exchange rate, GDP of Iran and GDP of Germany, the ARDL model has been utilized. Despite the negative effect of the dummy variable of war, the GIRF test result has shown existence of the J curve phenomenon in the non-oil trade relations between Iran and Germany. Regarding to positive effects of real exchange reate changes on trade balance; devaluation policy can be usefull for policymakers to improve non-oil trade balance of Iran-Germany.