Iranian Economic Review

Iranian Economic Review

Health-Economy Uncertainty, Institutional Quality and Economic Growth in Iran: A Time-Varying Parameter Analysis

Articles in Press

Document Type : Research Paper

Authors
Ramin Amani 1
Abbas Assari Arani 1
Almas Heshmati 2
Lotfali Agheli 3
1 Department of Economic Development and Planning, Faculty of Management and Economics, Tarbiat Modares University, Tehran, Iran.
2 Visiting Professor of Economics, University of Economics Ho Chi Minh city, Vietnam.
3 Institute of Economic Research, Tarbiat Modares University, Tehran, Iran.
10.22059/ier.2026.408866.1008378
Abstract
This study examines how health economy uncertainty and institutional quality jointly affect long run economic growth in Iran (1989–2024). Using an augmented Solow–Swan framework, we construct a novel health economy uncertainty index from 24 indicators (mortality, access to services, public health, health expenditures) and combine it with an institutional quality index from ICRG components. A time varying parameter OLS (TVP OLS) model with a Kalman filter allows all coefficients to evolve smoothly. Results show that health economy uncertainty has a negative and statistically significant effect on real output, while institutional quality exerts a positive and robust impact. The interaction term between the two is also negative, indicating that stronger institutions mitigate but do not neutralise the adverse effect of uncertainty. Traditional supply side drivers—labour and fixed capital—retain their expected positive contributions. The findings imply that Iran’s growth depends on structural fundamentals, health sector stability, and institutional quality, calling for integrated reforms that simultaneously reduce health uncertainty and strengthen institutions.
Keywords
Macroeconomic dynamics
Public-health risk shocks
Governance effectiveness
Output fluctuations
Time-varying parameter models
Subjects
Iranian Economic Review

Articles in Press, Accepted Manuscript
Available Online from 12 May 2026