Hassan Heidari; Rana Asghari; Roghayyeh Ali-Nezhad
Volume 15, Issue 57 , July 2015, , Pages 165-192
Abstract
The present study investigates the impact of government efficiency on inflation rate with considerations on the relationship of this important index with government intervention in the economy and also with the structure of government expenditures for 16 countries from MENA region over the period ...
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The present study investigates the impact of government efficiency on inflation rate with considerations on the relationship of this important index with government intervention in the economy and also with the structure of government expenditures for 16 countries from MENA region over the period 1996-2012. For this purpose, the paper uses the Panel Smooth Transition Regression (PSTR) model. The estimation results of model reject the linearity hypothesis, and estimate a continuous transition function with two regimes that gives a threshold at government efficiency of 0.185 for countries studied in this paper. Moreover the results indicate that government efficiency index, GDP growth and openness index have a negative impact on inflation rate that their impacts are increased for the values above the threshold calculated for government efficiency. The other results indicate that the coefficients of the government consumption expenditures growth and liquidity variables are positive and significant in two regimes. Though, their impacts are less in second regime. In general, the results of this study confirm the results of many other studies about positive effects of government consumption expenditure growth and liquidity and also negative effects of government efficiency index, GDP growth and openness index on inflation rate. Thus, it is recommended to reduce government size trough minimizing government personnel and its levels. It is also recommended to institutionalize accountability systems over the administrative and legal frame, and staffs professional manner in reception with citizens, and also have political stability and independence of government to central bank. These are effective ingredients in increasing the government efficiency and reduction of inflation rate.
Mansour Zarra Nezhad; Sahar Motamedi
Volume 12, Issue 46 , October 2012, , Pages 101-116
Abstract
Considering the pivotal role of stock market in the process of economic development, this research focuses on the relationship between the variables of exchange rate, interest rate, oil price shock and overall price index of Tehran Stock Exchange. For this purpose, we have applied three different methods ...
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Considering the pivotal role of stock market in the process of economic development, this research focuses on the relationship between the variables of exchange rate, interest rate, oil price shock and overall price index of Tehran Stock Exchange. For this purpose, we have applied three different methods of Toda and Yamamoto causality test (1995), Granger vector error correction causality test (1987) and Pesaran, Shin and Smith’s (2001) Auto Regressive Distributed Lag (ARDL). The empirical findings show that there is a long-run relation between the variables of the stock price index, exchange rate, inflation rate, interest rate and oil price shock. Based on Toda and Yamamoto causality test, there is a one-way causality from variables of exchange rate, inflation rate and interest rate to stock price index, and from stock price index, exchange rate and interest rate to inflation rate, as well as from interest rate to exchange rate. The results of Granger vector error correction test showed that there is a short run causality from exchange rate, inflation rate and interest rate to stock price index and a long run causality from exchange rate, inflation rate, interest rate and oil price shock to stock price index.
