eng
University of Tehran
Iranian Economic Review
1026-6542
2588-6096
2018-03-01
22
1
1
20
10.22059/ier.2018.65343
65343
Does Institutions Matter for Economic Development? Evidence for ASEAN Selected Countries
Mohammad Sharif Karimi
s.karimi@razi.ac.ir
1
Elham Heshmati Daiari
el.heshmati@yahoo.com
2
Department of Economics, Faculty of Social Sciences, Razi University, Kermanshah, Iran
Department of Economics, Faculty of Social Sciences, Razi University, Kermanshah, Iran
Abstract The theoretical and applied issues of the relationship between institutions and economic growth have thoroughly been examined in ASEAN countries. This study revisits the issue and tests the role of institutions in the economic growth using the World Governance Indicators (WGI) and uses a new method to examine the impact of the various institutions on the economic growth. We used dynamic panel using GMM panel data for 10 ASEAN countries over the period 1996–2014. The empirical analysis confirms a positive relationship between a composite WGI and the economic growth in the selected ASEAN countries. So, there is a positive impact of Voice and Accountability, Political Stability and Absence of Violence/Terrorism, Government Effectiveness, Regulatory Quality, Rule of Law, and Control of Corruption on economic growth in the selected countries. Other control variables showed that human capital, and physical capital have a significant influence on the growth as the theory predicts. This study also found that there is a bidirectional causality effect between the both variables.
https://ier.ut.ac.ir/article_65343_d56826e68ac442c5ba7b9ae59c394b55.pdf
Keywords: Institutions
Economic Development
ASEAN Countries
GMM
OLS
Granger Causality. JEL Classification: O43
C33
C14
eng
University of Tehran
Iranian Economic Review
1026-6542
2588-6096
2018-03-01
22
1
21
49
10.22059/ier.2018.65348
65348
The Democracy and Environment Quality in Selected Countries: An Application of Panel Data
Saeed Ghodrati
saedghodrati@gmail.com
1
Javad Harati
j.herati@ub.ac.ir
2
Azim Nazari
a.nazari@ub.ac.ir
3
Department of Economics, University of Bojnord, Bojnord, Iran
Department of Economics, University of Bojnord, Bojnord, Iran
Department of Economics, University of Bojnord, Bojnord, Iran
This study investigates the relationship between quality of environment and democracy among different countries over the period of 2002 - 2012. Democracy and accumulated democracy indices have been considered as political inequality variables influencing the quality of the environment among different countries in the reduced form of Kuznets’ environmental curve (EKC) hypotheses model. The empirical analysis is conducted using four panel data sets for countries with different HDI from 2002 to 2012. The results indicate a significant positive relationship between the level of democracy and capital accumulation of democracy among all country groups. This relationship in group of countries with high human development index acts in form of N reversed which is the environmental Kuznets curve. This relationship in groups of countries with high, medium and low human development indices is in form of N. Based on the results, improvement of democracy indices leads to a better environment quality. Therefore, applying the relevant policies with democracy condition improvement in different countries, specifically in countries with low and medium human development indices, can make a positive impact on improving the quality of environment in these countries.
https://ier.ut.ac.ir/article_65348_e9142be38c522262105d051546706df9.pdf
Keywords: Environment Quality
Environmental Kuznets Curve Hypothesis
Democracy Level
Democracy Stock. JEL Classification: K33
O13، C23
eng
University of Tehran
Iranian Economic Review
1026-6542
2588-6096
2018-03-01
22
1
51
62
10.22059/ier.2018.65349
65349
A New Unit Root Test against Asymmetric ESTAR Nonlinearity with Smooth Breaks
Omid Ranjbar
omid.ranjbar61@gmail.com
1
Tsangyao Chang
tychang@mail.fcu.edu.tw
2
Zahra Mila Elmi
z.elmi@umz.ac.ir
3
Chien-Chiang Lee
cclee@cm.nsysu.edu.tw
4
Iran and Trade Promotion Organization, Allameh Tabataba'i University, Tehran, Iran
Department of Finance, Feng Chia University, Taichung, Taiwan
Faculty of Economics, University of Mazandaran, Babolsar, Iran
Department of Finance, National Sun Yat-sen University, Kaohsiung, Taiwan
T
his paper proposes a new unit root test against the alternative of symmetric or asymmetric exponential smooth transition autoregressive (AESTAR) nonlinearity that accounts for multiple smooth breaks. We provide small sample properties which indicate the test statistics have good empirical size and power. Also, we compared small sample properties of the test statistics with Christopoulos and Leon-Ledesma (2010) test. The results indicate that our unit root test approach is superior to the test method of Christopoulos and Leon-Ledesma (2010) for both transition parameters (i.e. slow and fast speed), and the test power increases along with the frequency. We apply our test statistics for examining the real interest rate parity hypothesis among OECD countries.
https://ier.ut.ac.ir/article_65349_4d50238d553fcf3f7a5f274eba958559.pdf
Keywords: Unit Root
Asymmetry
ESTAR
Smooth Breaks
Real Interest Rate Parity. JEL Classifications: C22
G15
eng
University of Tehran
Iranian Economic Review
1026-6542
2588-6096
2018-03-01
22
1
63
103
10.22059/ier.2018.65352
65352
Foreign Trade and International Financial Flows: Implications for Economic Stability in the Selected ECOWAS Countries
Solomon Abayomi Olakojo
sa.olakojo@ui.edu.ng
1
Department of Economics, University of Ibadan, Ibadan, Nigeria
T his study investigates the effects of extra-ECOWAS merchandise trade and investment flows on the transmission of business cycles in the selected ECOWAS between 1985 and 2014. The study finds that total trade and foreign direct investment (FDI) significantly influence the transmission of business cycles with elasticities of 1.1 and 0.7, respectively in the long run. There are little variations across the major trading partners and other measures of trade flows. Intra-industry trade flows with all partners, EU and USA influences the cross-country business cycles with elasticities of 1.0, 0.5 and 1.8, respectively. There is a weak evidence of trade and investment relationship with China transmitting business cycles in the long run, except in the case of total trade flows in the short run. Inter-industry trade flows also show weak tendencies of transmitting business cycles. This study recommends greater needs to encourage trade (particularly, intra-industry) and foreign investment with the major trading partners. This, however, requires investment in critical infrastructure and upgrade of domestic technology to be deeply involved in global values chains necessary for the transmission of the desired business cycles. In addition, there is a need to diversify the export base and increase domestic investment to compliment foreign investments in order to minimize undesired business cycles spillovers that can undermine ECOWAS stability.
https://ier.ut.ac.ir/article_65352_7a6c05a8c6bcd52ee6c50204b2a4ac60.pdf
Keywords: ECOWAS
Foreign Trade
International Financial Flows
Cross-Country Business Cycles
Stochastic Technology Shocks. JELClassification: F14
F21
F44
eng
University of Tehran
Iranian Economic Review
1026-6542
2588-6096
2018-03-01
22
1
105
120
10.22059/ier.2018.65353
65353
The Attitudes of Iranians toward the Becker Proposition
Narges Hajimoladarvish
n.moladarvish@alzahra.ac.ir
1
Faculty of Social Sciences and Economics, Alzahra University, Tehran, Iran
This paper evaluates attitudes of Iranians toward crossing red traffic lights and their sensitivity to fines. Economic theory of crime under expected utility predicts that because of the possibility of severe punishments, risk adverse individuals would not cross red lights. This is implied by the Becker proposition. However, among 262 individuals surveyed, more than half of the sample has previous records of conviction with respect to traffic laws. The result indicates that the effect of introducing a new fine on pedestrians is about twice the effect of increasing the existing fine on drivers by 150%. The elasticity of crossing red lights with respect to fine hike is -0.25. Regression analysis shows that previous record of breaking traffic laws, being single and crossing red lights by cars are significant explanatory variables for decision to do jaywalking.
https://ier.ut.ac.ir/article_65353_f990cd88b56241177df9f46ed9b4d774.pdf
Keywords: Becker Proposition
Crossing Red Traffic Lights
Jaywalking
Expected Utility. JEL Classification: D81
K42
eng
University of Tehran
Iranian Economic Review
1026-6542
2588-6096
2018-03-01
22
1
121
162
10.22059/ier.2018.65354
65354
Major Determinants of Foreign Direct Investment in the West African Economic and Monetary Region
Akinleye Simeon Oludiran
soakinleye@unilag.edu.ng
1
Laleye Nicaise Abimbola
akinleye@gmail.com
2
Department of Economics, University of Lagos, Lagos, Nigeria
Department of Economics, University of Lagos, Lagos, Nigeria
The main concern of this paper is to answer the question of the determinants of FDI inflows to West African Economic and Monetary Union (WAEMU). The literature on FDI recognizes not only the existence of gaps between domestic savings and investment in most developing countries but also that FDI constitutes a cure capable to bring the latest technology and management know-how into these countries. The aim of this paper is to find the macroeconomic determinants of FDI in WAEMU (constituted of 8 countries namely: Benin, Burkina Faso, Cote d’Ivoire, Guinea Bissau, Mali, Niger, Senegal and Togo). To this end, an econometric model based on panel cointegration analysis for the period 1980-2010 was estimated. The results show that countries with high potential market size (GDP per capita), large trade openness and with more business friendly environment (low political risk) attract more FDI. The findings further show that: (i) infrastructure development is one of the most important determinants that attract FDI to the region; alongside the human capital, financial development, macroeconomic stability, exchange rate and political stability; (ii) not all the variables affect FDI the same way in the WAEMU region; (iii) there is a positive relationship between FDI and economic growth which implies that FDI stimulates economic growth; (iv) this study finds a positive relationship between FDI and macroeconomic stability (inflation) in WAEMU; (v) financial development needs to be improved to enable more gain from FDI. This suggests that the impact of FDI can be enhanced through financial development under a good environment that has to be provided in WAEMU.
https://ier.ut.ac.ir/article_65354_d14829b20d0aea083d2622bf2f3b644a.pdf
Keywords: WAEMU
FDI
Determinants
Granger Causality. JEL Classification: F21
F43
eng
University of Tehran
Iranian Economic Review
1026-6542
2588-6096
2018-03-01
22
1
163
185
10.22059/ier.2018.65355
65355
The Interactive Relationship between Economic Growth and Foreign Direct Investments (FDI): A VAR Analysis in Iran
Monireh Rafat
m.rafat@ase.ui.ac.ir
1
Department of Economics, University of Isfahan, Isfahan, Iran
T
he impact of FDI on economic growth is neither homogeneous, nor completely clarified. Due to accumulation of capital in the host economy, FDI is expected to encourage the incorporation of new inputs and technologies in the process of production. However, the impact of FDI on economic growth is not so shaped up in empirical studies. Accordingly, while some studies remarked a positive impact of FDI on economic growth, others showed a negative relationship between the two variables. In this paper, we will analyze absorb methods of foreign investment, effective factors in foreign direct investment (including economic, encouragement and protection, and natural and politic factors), and connection between foreign direct investment and growth. We carried out an analysis of vector autoregressive (VAR) type, so as to identify the relationship between FDI and economic growth in Iran over the period 1991–2014. Result shows that economic growth and foreign direct investment have a positive impact on each other; hence there is a reciprocal relationship between them. Also, Granger causality test for GDP growth and foreign direct investment indicate that a reciprocal relationship exists between these two variables.
https://ier.ut.ac.ir/article_65355_a825a02dcfc008e9c5abe5c7ccdc87fc.pdf
Keywords: Foreign Direct Investment (FDI)
Economic Growth
VAR Analysis. JEL Classification: F13
F23
F30
eng
University of Tehran
Iranian Economic Review
1026-6542
2588-6096
2018-03-01
22
1
187
213
10.22059/ier.2018.65357
65357
Effective Factors on the Growth of Provinces of Iran: A Spatial Panel Approach
Sayed Mansoor Khalili Araghi
khalili@ut.ac.ir
1
Elham Nobahar
enobahar@tabrizu.ac.ir
2
Mahboobeh Kabiri Renani
m.kabiri@ut.ac.ir
3
Faculty of Economics, University of Tehran, Tehran, Iran
Faculty of Economics, University of Tabriz, Tabriz, Iran
Faculty of Economics, University of Tehran, Tehran, Iran
I
n order to have a successful regional planning policy, one needs to know exactly the effective factors on the growth of the provinces. Thus, determining and evaluating these growth rates are important for urban and regional planners. The main goal of this study is to determine the effective factors on the growth (population growth and per capita income growth) of Iran’s provinces. In this regard, three groups of factors, economic, social and locational, were considered. The population growth and per capita income growth models were considered via spatial panel for the period of 2007-2015. We have also studied the spatial dependence as well as spatial spillovers between the provinces on regional growth. The results show that there have been meaningful growth spillovers between the provinces of Iran. Therefore, any change in one province, besides having its effect on that province also has spillover effects on neighboring provinces. Also the results show that real per capita income, transportation infrastructure, the index of service specialization, the index of production specialization and the index of competitiveness are the most important factors on the growth of the provinces of Iran.
https://ier.ut.ac.ir/article_65357_a592198b97be24b7788d51cf9b36ff95.pdf
Keywords: Population Growth
Per Capita Income Growth
Spatial Panel
Spillover Effects. JEL Classification: C23
R11
R23
eng
University of Tehran
Iranian Economic Review
1026-6542
2588-6096
2018-03-01
22
1
215
233
10.22059/ier.2018.65359
65359
The Impact of Human Capital on FDI with New Evidence from Bootstrap Panel Granger Causality Analysis
Pegah Sadeghi
pegah.sadeghi@srbiau.ir
1
Hamid Shahrestani
shahrest@ohio.edu
2
Kambiz Hojhabr Kiani
khkiani@yahoo.com
3
Taghi Torabi
t-torabi@srbiau.ac.ir
4
Department of Economic, Science and Research branch, Islamic Azad University, Tehran, Iran
Department of Economic, Science and Research branch, Islamic Azad University, Tehran, Iran
Department of Economic, Science and Research branch, Islamic Azad University, Tehran, Iran
Department of Economic, Science and Research branch, Islamic Azad University, Tehran, Iran
T
his study evaluates the causality relationship between human capital and foreign direct investment inflow in twenty-six OIC (the Organization of Islamic Cooperation) countries over the period 1970–2014. We employed the panel Granger non-causality testing approach of Kònya (2006) that is based on seemingly unrelated regression (SUR) systems, and Wald tests with country specific bootstrap critical values. The approach allows one to test for Granger non-causality on each member of panel, separately by taking into account the cross-sectional dependency and slope heterogeneity among countries investigated simultaneously. We found that the hypothesis of Granger non-causality from human capital to foreign direct investment (FDI) was rejected for more than half of the sample countries, mainly among African states. In addition, the effect magnitude of human capital on FDI varies among the states significantly.
https://ier.ut.ac.ir/article_65359_939834ab0c9385d72bda3dc6b03fbcee.pdf
Keywords: Foreign Direct Investment (FDI)
Human capital
Seemingly Unrelated Equation System
Bootstrapping
OIC Countries. JEL Classification: C21
F2
F21
eng
University of Tehran
Iranian Economic Review
1026-6542
2588-6096
2018-03-01
22
1
235
251
10.22059/ier.2018.65362
65362
A Mathematical Programing Model of Budget Allocation for Development Disparities Reduction among Iran Provinces
Hadi Rahmani Fazli
hady.rahmani@gmail.com
1
Abbas Arabmazar
ab_arabmazar@sbu.ac.ir
2
Faculty of Economics, University of Allame-Tabatabaei, Tehran, Iran
Faculty of Economics, University of Shahid Beheshti, Tehran, Iran
The issues of disparities, regional imbalance development and attempt to reducing development disparities among various regions have been attracted considerable attention among researchers, planners and policy makers. In this regard, this study employs a mathematical programing model for budget resources allocation among Iran provinces in order to development disparities reduction among them. In this regard, the goal of the study is divided to several main sectors include education, economic development and welfare indicators. Then the mathematical model is designed in order to reduce development gap among Iran provinces in these several sectors. For this regard, we first identify the province which has best performance in under investigating indicator and then we define and calculate distance variable for other provinces. Finally, after the specification of objective function and restrictions, the designed model is solved. Comparison results of the model with the actual situation in 1390 shows that the used allocating method of provinces budgeting has not been optimal, so it seems to be necessary to review in the current method of provinces budgeting.
https://ier.ut.ac.ir/article_65362_4ede242b112e35babd5fac6f4764b13a.pdf
Keywords: Development Disparities
Mathematical Programing
Provinces of Iran
Budgeting. JEL Classification: C61
H50
H72
eng
University of Tehran
Iranian Economic Review
1026-6542
2588-6096
2018-03-01
22
1
253
293
10.22059/ier.2018.65364
65364
Foreign Exchange Rate Pricing at the Future Contract (Case of I.R. of Iran)
Hossein Bastanzad
hbastanzad@mbri.ac.ir
1
Pedram Davoudi
p.davoudi@imps.ac.ir
2
Hossein Tavakolian
hossein.tavakolian@atu.ac.ir
3
Economist in Money and Foreign Exchange Department, Monetary and Banking Research Institute of the Central Bank of Iran (MBRI) Tehran, Iran
Institute for management and planning studies (IMPS), Tehran, Iran
Faculty of Economics, Allameh Tabataba'i University, Tehran, Iran
The RER which is theoretically influenced by the real interest rate differential (RRE) and currency excess return (CER), is statistically examined during 1990-2016. Accordingly, the stationarity of RER as null hypothesis is not approved in the Iranian economy. Therefore, the TVAR method is examined to analyze the nonstationary RER sample to two sub-periods stationary process which are both statistically recognized trend stationary and mean reversion in the context of flexible and inflexible regimes. The impacts of the RRE and CER on the RER are examined by TVAR method. The results indicate that the expected value of RER significantly explains the real interest rate differential given the fact that the estimated parameters is approximately considered non-zero. Thus, the hypothesis of real interest rate parity (RRE) is rejected in both flexible and inflexible regimes in Iran. Eventually, future contracts should be introduced at the foreign exchange market to reduce risks and uncertainty.
https://ier.ut.ac.ir/article_65364_add5d7977b9862e02b499c56bbeef1b6.pdf
Keyword: Foreign Exchange Rate
UIP
RRE
Hedging
Future Contract. JEL Classification: F31
G13
E42
C12
C15
eng
University of Tehran
Iranian Economic Review
1026-6542
2588-6096
2018-03-01
22
1
295
314
10.22059/ier.2018.65366
65366
Time Series Analysis of Non-Oil Export Demand and Economic Performance in Nigeria
Adesoye A. Bolaji
adesoye.bolaji@oouagoiwoye.edu.ng
1
Adelowokan Oluwaseyi Adedayo
adelowokan.seyi@oouagoiwoye.edu.ng
2
Alimi Y. Olorunfemi
129081045@spgs.unilag.edu.ng
3
Department of Economics, Olabisi Onabanjo University, Ago-Iwoye, Ogun State, Nigeria
Department of Economics, Olabisi Onabanjo University, Ago-Iwoye, Ogun State, Nigeria
Department of Economics, University of Lagos, Akoka, Yaba, Lagos state, Nigeria
T his study examines the impact of non-oil export demand on economic performance in Nigeria using annual time series data between 1975 and 2013. The study tests for the unit root and co-integration to determine the time series properties of our variables before using Vector Error Correction (VEC) model for both short- and long- run estimates and possible policy inferences. The results show that non-oil export has a positive impact on economic growth suggesting that policies formulated towards improving the export of non-oil commodities in Nigeria will directly boost output growth of other sectors such as agriculture, manufacturing, services etc. The findings also reveal a uni-causal link from export to growth in Nigeria, thereby, supporting the export-led growth hypothesis. The policy implication of this finding is that failure on the part of policy makers to increase non-oil exports will directly hurt the economy of Nigeria. This is also consistent with the findings in the short-run. It was also found that capital and labor have direct and significant impact on output growth.
https://ier.ut.ac.ir/article_65366_76f2e6c3d5abd598d5a6ce8f6a8ff709.pdf
Keywords: Non-Oil Export Commodities
capital
Labor
government spending
Output Growth. JEL Classification: C32
E64
F11
F14
F43