فهرست مطالب

Iranian Economic Review - Volume:26 Issue: 69, Autumn 2022

Iranian Economic Review
Volume:26 Issue: 69, Autumn 2022

  • تاریخ انتشار: 1401/11/23
  • تعداد عناوین: 14
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  • Mojtaba Abbasian *, Ali Sardar Shahraki, Neda Ali Ahmadi Pages 727-738
    Sustainable management of water resources in order to maintain environmental needs requires an economic approach in the agricultural sector. Given the development and transformation of Iran’s national economy, the agricultural sector has emerged as the pivot of economic security and viability. In the economic approach, managing demand requires determining the real price of water. The present study uses the cross-sectional data for the 2018-2019 crop years in order to estimate the price of water for mango and also to estimate its demand with an emphasis on environmental inputs. To this end, the real price of water is determined by the residual method, and the demand function is estimated by the translog cost function and the equations of the contribution of inputs in cost. The results support the good fit of the model used for the cost function of mango in the studied county. The results for the coefficients in Chabahar County indicate that water cost has a positive relationship with the prices of manure, water, seedling, and crop yield and a negative relationship with the prices of pesticides and chemical fertilizers. Based on the results of the water demand function, water is a substitute for manure, chemical fertilizer, and seedling with partial elasticities of >1, revealing the impact of water use management and economic valuation on improving the use of other environmental inputs (pesticides, manure, and chemical fertilizers) and seedling, as well as the water itself, in mango production in this region. It is recommended to adopt policies like optimal pricing of inputs including pesticides, manure, chemical fertilizers, and seedling in order to curb the resulting environmental pollution.
    Keywords: Chabahar, Cost Function, Demand Management, Environmental Inputs, Mango, Water pricing
  • Mohammad Djirimu *, Haerul Anam, Frilly Andrelia Utami, Andi Tombolotutu Pages 739-749
    This research aims to analyze the feasibility of implementing single currency policy in ASEAN+3 countries such as Indonesia, Singapore, Malaysia, Thailand, Philippines, Myanmar, Laos, Cambodia, Brunei Darussalam, Vietnam, China, South Korea, and Japan based on annual data from 1993 to 2017. In this research, the panel data is analyzed using Pooled Least Square regression model and Moving Average forecasting method to predict optimum currency area indices of ASEAN+3 in the period of 2018 to 2022. The results showed that (1) ASEAN+3 region is not ready to implement single currency policy because of an increasing trend of asymmetric shock, lack of business cycle synchronization, and differences in production structure, trade relations, and economy size among ASEAN+3 countries. (2) There are four converged country pairs, which mean higher feasibility of forming optimum currency area for the four country pairs; Brunei Darussalam and Singapore have the most symmetrical foreign exchange volatility among the other country pairs
    Keywords: Single Currency, optimum currency area, ASEAN+3
  • Alireza Saadati, Zahra Honarmandi *, Samira Zarei Pages 751-767
    In this paper by applying the NARDL approach, we revisit the “fear of appreciation” hypothesis in the case of Iran by analyzing the effects of exchange rate shocks (both appreciations and depreciations) on the various export-oriented industries in the Tehran Stock Exchange. To this aim, the data used include monthly data of both main variables, i.e. real exchange rate, different stock market indexes (which include Petrochemical, Basic Metal, and Mining industries indexes), and control variables, i.e. inflation, OPEC oil price, and international sanctions. Our findings illustrate that not only have exchange rate shocks significant effects on different stock indexes but also these relationships are asymmetric and nonlinear. Moreover, our results have confirmed the fear of depreciations hypothesis in the export-oriented industries in the Tehran Stock Exchange.
    Keywords: Exchange rate shocks, Export-Oriented Industries, Fear of Depreciation, NARDL model
  • Strike Mbulawa *, Nathan Okurut, Ntsosa Malebogo, Narain Sinha Pages 769-782
    Zimbabwe's experiences with hyperinflation (2000-2008) and dollarization (2009-2019) have implications for investment decisions. The uniqueness of these periods justifies the need for critical analysis as decisions on whether to invest are sensitive to such structural changes. Because of this, the study uses the modified Tobin's Q model to examine the main determinants of investment behavior. A dynamic and non-linear model is applied using data from a panel of 30 listed and non-financial firms from 2000 to 2016. The main determinants of investment decisions are managerial discretion or power, financial constraints, uncertainty, and access to external sources of finance. Findings are sensitive to the period of analysis and consistent with the pecking order hypothesis. Interactions between investment expenditure and other corporate financial decisions are confirmed. Policymakers need to take a differentiated approach to making investment decisions. It is desirable to develop policies sensitive to prevailing market conditions, reduce financial constraints and remove informational inefficiencies to improve the uptake of debt finance and other external funding sources. Monitoring executive decision-making power will reduce entrenchment levels and hence the agency problem. Firms should improve on future financial flexibility by taking less debt, and a dynamic investment strategy sensitive to firm size is more plausible.
    Keywords: Investment, Q-theory, Zimbabwe, hyperinflation, Dollarization
  • Hassan Heidari *, Parinaz Dadashzadehrishekani Pages 783-790
    In this paper, we investigate the effects of selected macroeconomic variables on the Istanbul Stock Market Return. We explore the relationship among the Istanbul Stock Market Return, Crude oil price, Inflation rate, and Exchange rate via employing monthly data from 2000-04-01 until 2017-12-01 in Turkey. Based on the Markov Regime Switching Model, we find that the Turkish Stock Market Return is divided into two regimes. The results indicate that Stock Return lags have a positive effect on the Stock Market itself, and only the second lag in regime 1 is significant. Besides, the test results show that the positive effects of crude oil price and negative effects of inflation rate in regime 0 (Low-return regime) are meaningful, while the exchange rate is meaningful just in regime 1 (High-return regime), which leads to reductions in Stock Market Return. Furthermore, the probability matrix indicates that the probability of stability in regime 0 is more than that of regime 1.
    Keywords: Istanbul Stock Market Return, Macroeconomic variables, Markov Regime Switching Model, Turkey
  • Ali Faridzad *, Abdolrasool Ghasemi, Mahsa Rajabi Nejad, MohammadAmin Mohammadian Pages 791-807

    The electricity supply security has played a vital role in the economic development of Iran. However, a large number of electricity supply disruptions has happened in recent years, which lead to electricity shortage costs in the level of economic sectors. Using a combination of Input-Output analysis and the Linear Programming method, this study measures the producer price index as average costs of Iranian economic sectors after imposing a unique scenario of a 30% potential electricity shortage supply. In this regard, we employ an Iranian symmetric Input-Output 14Í14 industry-by-industry Table for the year 2011. The results of this study indicate that the most shortage cost occurs for the manufacture of wood and paper products, while the services have the lowest cost after electricity supply disruption. Besides, increasing the costs of non-electricity sectors in the Iranian economy after the electricity supply shock is 175.63% on average. The quantitative results are useful for policymakers attempting to set strategic plans to reduce the electricity cost in manufacturing sectors and optimal distribution of limited electricity resources to reduce the overall cost of blackouts.

    Keywords: electricity, Input-Output Analysis, Linear programming, Shortage Cost, Iran
  • Yadollah Dadgar *, Sadegh Menatnejad, Rouhollah Nazari Pages 809-818
    Some evidence indicates the role of economic variables including unemployment and inflation in committing a crime. However, the researches regarding the role of climate factors on crime are a few. This paper is investigating the climate factors alongside economic ones influencing crime in Iran for the 1984-2020 period. We use the misery index, the combination of inflation and unemployment in this work. One of our hypotheses is that there is a significant relationship between the misery index and committing crimes in Iran. The results indicate that firstly, there are positive and significant relationships between the misery index and economic growth on one hand and the amount of crime on the other. Secondly, there is a positive and significant relationship between climate factors and the number of committed crimes.
    Keywords: crime, Climate factors, law, economics, economic factors, Iran
  • Andewi Rokhmawati *, Desy Desy, Edyanus Herman Halim Pages 819-832
    The purpose of this study was to compare banks' ratios: return on assets (ROA), the ratio of operating costs to operating incomes (BOPO), and the ratio of financing to total third-party funding (FDR) before and after the spin-off, as well as ROA, FDR, and BOPO between pure spin-off through separation and impure spin-off through acquisitions and conversion. In 2019, there were eleven sharia banks in the population. This study included five banks in the research samples based on quarterly data availability three years before and after the spin-off. The method used is the two related samples Wilcoxon test due to the abnormally distributed data before and after the spin-off and the independent sample t-test for comparing ROA of a pure and impure spin-off, also used Mann-Whitney test to compare FDR and BOPO between pure and impure spin-off. The results are that ROA after spin-off is higher but insignificant than before spin-off; BOPO after spin-off is significantly higher than before spin-off. FDR after spin-off is significantly lower than before spin-off. Furthermore, an impure spin-off provides a significantly higher ROA than a pure spin-off. Impure spin-off gives higher BOPO but is insignificant. Finally, impure spin-off results in a significantly higher FDR than the pure one. These results imply that the limited-service coverages due to their small size challenge newborn BUSes to increase their market share. The too-small sizes also become the burden of newborn BUSes to benefit-cost reduction through economies of scale.
    Keywords: Return on asset, Finance to Deposit Ratio, Operating Expenses to Operating Income, Spin-off, Sharia Banks
  • Umar Dabachi, Suraya Mahmood, Ali Ahmad *, Aminu Jakada, Ahmad Abdullahi, Mohammed Abubakar, Kabiru Kamalu Pages 833-851
    This paper examined the asymmetric effects of exchange rate, and inflation on financial development growth using a model enhanced with oil prices asymmetry to apprise model specification. The research question that has been used implies, do the changes in their asymmetry significantly influence financial development? We employed nonlinear auto-regressive distributive lag (NARDL). In addition, we used the monthly data from 1980M01 to 2018M12. We found a long-term negative shock in exchange rate, both short run positive shock and negative shocks, respectively, declining the financial development. Additionally, the long run negative oil price shock and its long-term positive shocks stimulate and decline financial development, respectively. Regarding inflation, its positive and negative shocks in long run, respectively, reduce financial development. While in the short run the negative and positive shock in inflation increase and decline the financial development respectively. Accordingly, the results demonstrate a stable and sustainable inflation and exchange rate environment that would negatively cause financial development to stabilize the oil price and enhance the robust financial system. Therefore, successful policies that promote low inflation and exchange rates, overhaul of reliably improved financial institutions, capital accumulation, and efficient resources mobilization should be put in place for positive financial development to occur.
    Keywords: Asymmetries, Exchange rate, Financial Development, Inflation, NARDL, oil prices
  • Mohini Gupta *, Sakshi Varshney Pages 853-875
    The paper focuses on the impact of exchange rate volatility on the trade flow between India and the US. Previous research on India's trade flow has concentrated on India's overall aggregate export across border nations. Many maintain the work on bilateral trade pair-wise, although very few have observed the commodities trade at a disintegrated scale. This paper explores Indian export trade at disaggregate commodity-wise, undertaking 60 Indian exporting commodities to the US. We apply generalized autoregressive conditional heteroscedasticity (GARCH) based models to gauge the real exchange rate volatility and to discover the short-run and long-run relationships; an autoregressive distributed lag model is applied to the time series data. The empirical analysis at the disaggregate level of export indicates the short-run as well as the long-run effect of exchange rate volatility. However, the estimated short-run effect, which lasts onto the long-run effect, is in 16 exporting commodities. This paper provides more specific information about the relationship between exchange rate volatility and bilateral export commodities using individual-level data. The study's finding helps to undertake the view of invariability and consider the industry before policymakers.
    Keywords: Export, trade, Time Series ARDL, EGARCH, commodity, India
  • Wajdi Moussa *, Nidhal Mgadmi, Azza Bejaoui, Tarek Sadraoui Pages 876-884
    In this paper, we attempt to examine the relationship between microfinance and sustainable development for 10 MENA countries over the period 1990-2018. To this end, we use a multi-step approach based on different statistical tests and econometric models (STAR, ESTAR, LSTAR, and STECM). The empirical results clearly show a positive and significant relationship between the indicators of microfinance and sustainable development. By offering the opportunity to access microcredit, microfinance institutions can contribute to reinforcing sustainable development. Therefore, households should be encouraged to create investment opportunities and increase their demand for microcredit Our empirical analysis establishes a positive and significant relationship between microfinance indicators and sustainable development. Such a relationship seems to be dynamic over time and especially significant during short-term. Therefore, by providing the possibility to access microcredit, microfinance institutions can contribute to boosting sustainable development. Accordingly, the present study contributes to the literature on microfinance by providing convincing evidence that microfinance and microcredit have a significant effect on sustainable development.
    Keywords: Microcredit, Growth, Long-term Relationship, Star, STECM
  • Mohammad Sayadi *, Meysam Rafei, Younes Sheykha Pages 885-904
    Investigating the dynamic relationship between markets has attracted the interest of many researchers; however; assessing the asymmetric volatility spillovers has been addressed by a few studies. In this regard, this study mainly aims to investigate the asymmetric spillovers of oil price return and exchange rate, as the key variables, on chemical industry stock returns in Iran through the lens of a VAR Triangular BEKK in mean (VAR-TBEKK-in-mean) model. Also, daily data from March 31, 2009, to June 28, 2019, was selected. The chemical industry was selected since attracted a high share of capital in the Tehran Stock Exchange (TSE) and is highly correlated with crude oil prices. The results indicated a significant volatility spillover from oil and exchange markets to the chemical industry stocks.  Moreover, the result of the symmetry test indicated that global oil price shocks asymmetrically affect the conditional volatility of chemical industry stock returns. The results additionally indicate that the relationship between these markets and the extent of risk spillover between them is severely affected by the (good and bad) news and volatility of another market (particularly the oil market). Based on the results, investors are better off allocating their portfolios to chemical stocks more carefully, especially when the volatilities in the two markets (exchange and crude oil) are high. Capital market officials are advised to develop the stock market by deepening the capital market and taking into account the risk spillovers of foreign exchange and oil markets to the stock market.
    Keywords: Volatility spillover, VAR-TBEKK-in-mean model, Conditional Volatility, Chemical Industry, Crude Oil
  • Ibrahim Farouq *, Nuraddeen Sambo Pages 905-921
    This article gives empirical evidence that the real exchange rate can significantly affect sustainable productivity growth, which confirms the hypothesis that the effect critically depends on the degree of the economy’s financial development. Following the relatively underdeveloped financial system in Nigeria, its exchange rate reduces the productivity growth of the economy. In this article, we consider the interacting effect of exchange rate fluctuation and the level of financial development instead of analyzing the exchange rate fluctuation in isolation. The empirical estimation is based on Nigerian data set covering the years 1980-2019; through the application of threshold autoregressive non-linear co-integration and the non-linear ARDL estimation. We further deploy a test of causality using the frequency domain that enables us to differentiate a temporal as well as a permanent causality. The findings appear that financial development amplifies the positive effects of the real exchange rate on Nigeria’s economic growth. It also records that the uncertainty in foreign capital flows adversely affects Nigeria’s output growth. The paper recommends that Nigerian policymakers should in their attempt to diversify and improve the future growth of the economy, promote adequate financial sector development since financial shocks are amplified with poorly implemented credit markets.
    Keywords: Exchange Rate Volatility, Threshold Autoregressive, Frequency domain, NARDL
  • Ali Adeli Koudehi, Homa Esfahanian * Pages 923-930
    The soft budget constraint tells us that because there is no strict relation between income and expenditure of state-owned firms, these firms do not have the incentive to increase their efficiency. The solution to this is privatization. However, because privatization creates opportunities for corruption, we see the reproduction of the soft budget constraint. Here, we articulate privatization as a principal-agent model. The principal may transfer public assets to three types of agents: corrupt, not corrupt, and worker cooperative. The characteristics of the worker cooperative agent are ascribed to the standard model of efficiency wage. The result is that the rate of cronyism was lower when the worker cooperative agent was introduced. This observation suggests that while the privatization to worker cooperatives cannot diminish corruption, it decreases corruption substantially. Furthermore, we also see that the efficiency of worker cooperatives is higher than investor-owned firms. The important conclusion from our study is that the corruption of privatization is partially for overcoming the incomplete information about the agents (new owners), and it is from this point that privatization to worker cooperatives can curb corruption. The higher efficiency of worker cooperatives compensates for incomplete information. We propose the privatization of worker cooperatives instead of investor-owned firms.
    Keywords: Privatization, Worker Cooperatives, Investor-owned Firms, corruption