Comparative Comparison for Effects of Balance of Payments Shocks in Different Exchange Rate Regimes: A DSGE Approach

Mohammad Nikzad; Mahdi Yazdani; Hassan Dargahi

Volume 23, Issue 89 , July 2023, Pages 5-57

https://doi.org/10.22054/joer.2024.75238.1154

Abstract

Balance of payments shocks can impact economies in varying degrees depending on their structural characteristics, often leading to the formation of business cycles. These cycles cause key macroeconomic variables, such as output, inflation, and exchange rates, to deviate from their long-term trends. ... Read More Balance of payments shocks can impact economies in varying degrees depending on their structural characteristics, often leading to the formation of business cycles. These cycles cause key macroeconomic variables, such as output, inflation, and exchange rates, to deviate from their long-term trends. The exchange rate policy and regime play a critical role in determining how these shocks propagate and generate business cycles. This research employs a dynamic stochastic general equilibrium (DSGE) model to evaluate the effects of different balance of payments shocks—including oil exports, non-oil exports, and terms of trade shocks—on major macroeconomic variables in Iran under various exchange rate regimes (ERRs). Using welfare loss criteria and impulse-response functions, the findings indicate that a fixed real ERR results in the least welfare losses under different balance of payments shocks. Additionally, a managed floating ERR performs better than a floating ERR, whereas a fixed nominal ERR incurs the greatest welfare losses. The results also suggest that minimal central bank intervention minimizes the recessionary impact of negative shocks in the short run, although it leads to higher inflationary effects. Introduction Generally, due to the impact of balance of payments shocks in creating business cycles, the existence of equilibrium in the balance of payments is considered one of the important indicators of macroeconomic stability. One significant channels through which these shocks affect business cycles is the real exchange rate channel, and thus, the exchange rate policy is crucial. Also, in Iran as an oil-dependent economy, due to the role of oil revenues in the government's general budget, industrial production relies on foreign currency income from oil exports to import intermediate and capital goods. Therefore, examining foreign exchange rate policies is particularly important. The primary purpose of this study is to evaluate the role of foreign exchange rate policies in transferring balance of payments shocks to aggregate output and business cycles. For this purpose, a dynamic stochastic general equilibrium model (DSGE) is used to evaluate and compare the effects of balance of payments shocks (including oil export shock, non-oil export shock, and the term of trade shock) on macroeconomic variables and especially in creating business cycles in different Exchange Rate Regims (ERRs). Methods and Material The main framework of the DSGE model in this study is taken from the studies of Adolfson et al. (2007), Gekain and Kulikov (2009), Balke and Brown (2018) and Tavaklian and Jalali Naini (2016), which are based on the topic and questions of the research and has expanded according to the structure of Iran's economy. Based on this, the model includes the household sector, producer sector, labor market, government sector, central bank, as well as trade sector including export, import, and balance of payments account components. Also, before simulating different shocks, the calibration method will be used to calibrate the model parameters as suggested by Chen et al. (2012) and Angelopoulos et al. (2010). The time series of all macroeconomic variables were extracted from economic databases such as the Central Bank of Iran and the Statistical Center of Iran, with their average calculated as steady-state parameters. Finally, examining and comparing the moments of the actual data of the Iranian economy with the moments obtained from the introduced model, indicates the relative success of the model in the Iranian economy. Results and Discussion In the framework of different ERRs, the effects of negative shocks (equal to 10% on oil exports, non-oil exports and the term of trade) have been investigated and the results are compared based on the welfare loss function in Table (1). Generally, the welfare loss function is the weighted sum of output, inflation and real exchange rate variances that indicates the weighted sum of instability in important macroeconomic variables due to temporary negative shock, which is calculated for the entire period from short-term to long-term. Therefore, the question is, in which of the ERRs, the vulnerability of the macroeconomic is less against negative shocks? The important findings are as follows: The prioritization of ERRs with the aim of reducing the effects of negative shocks, is the same in all three negative shocks of oil, non-oil exports and the term of trade. The welfare loss resulting from shocks is the highest in the fixed ERR and the lowest in the fixed real ERR. After the fixed ERR, the floating and the managed floating ERRs have more welfare losses, respectively. In the short-run, as compared to the floating ERR, a negative shock with the deterioration of the balance of payments, leads to less inflation but more recession in the fixed ERR. However, in the whole period, the loss of the fixed ERR is more than the floating one. In the short-run, as compared to the floating ERR, the negative shock in the managed ERR with the deterioration of the balance of payments, leads to less inflation and recession. In the whole period, the welfare loss of the managed ERR is less than the floating ERR. In the short-run, a negative shock in a fixed real ERR, compared to a managed floating ERR, leads to more inflation and less recession. However, in the whole period, the loss of the fixed real ERR is less. If the level of intervention of the central bank in the foreign exchange market is classified from the highest to the lowest, we will have the fixed, the managed floating, the fixed real exchange rate, and the floating ERRs, respectively. The results of the model show with the lowest central bank's intervention, the recessionary effect of the negative shock is lower, but the inflationary effect is greater in the short-run. Due to the dependence of the trade structure and government budget on oil revenues in Iran's economy on the one hand, as well as the ownership and supply of foreign currency resulting from oil exports by the government and other assumptions of the research model, fixed and floating exchange rate policy rules are not recommended. Rather, the fixed real exchange rate and managed floating ERRs have relatively fewer losses, respectively. Although one of the essentials of the successful implementation of the managed floating ERR against negative shock, is the possibility of sufficient foreign exchange reserves of the central bank to intervene in the foreign exchange market to eliminate short-run fluctuations. In all ERRs, the negative shock of oil export has the largest welfare loss compared to other impulses. Table 1 Comparing the Welfare Losses of the Impulse Response Functions of Shocks in Different Exchange Rate Systems Shock ERRs Variance Welfare Losses Output Inflation Real Exchange Rate Oil-export Fixed 0.3893 0.0316 1.19 0.5234 Floating 0.0119 0.116 1.21 0.4028 MF 0.0414 0.0075 0.184 0.0740 FR 0.0144 0.0054 0 0.0162 Non-Oil-Export Fixed 0.0058 0.0007 0.0156 0.0072 Floating 0.0002 0.0004 0.1016 0.0037 MF 0.0014 0.0003 0.0051 0.0022 FR 0.0006 0.0005 0 0.0007 Term of Trade Fixed 0.0066 0.0007 0.0719 0.0082 Floating 0.0002 0.0004 0.0107 0.0034 MF 0.0018 0.0004 0.0067 0.0028 FR 0.0009 0.0006 0 0.0010 *MF and FR refer to Managed Floating and Fixed Real Exchange Rate Regime, respectively. Source: Research Findings Conclusion Based on the results, the oil export shock has the greatest impact on the welfare loss, making it a high priority to create a stable trend in income from oil export. Policymakers should prevent the occurrence of a strong shock in the amount of injected foreign currency, in order to create stability in the production process. This can be done with the currency stabilization fund within the framework of the National Wealth Fund. Oil shocks can also affect the exchange rate, so it is necessary to control the oil shocks to prevent the exchange rate fluctuations. It should also be noted that non-oil export shock causes business cycles and welfare losses. Therefore, the policymakers should pay attention to the diversification of production and exports. Stabilization of foreign exchange income from oil and non-oil exports on the one hand, and the expansion of domestic production on the other hand, leads to the reduction of welfare losses caused by various shocks in the balance of payments.

Estimating Firm and Industry-Specific Uncertainty and Their Impacts on Capital Structure: Applying Stochastic Volatility (SV) Model and Multilevel Panel Analysis

Parisa Mohajeri; Reza Taleblou; Mina Yaghchi

Volume 23, Issue 89 , July 2023, Pages 58-89

https://doi.org/10.22054/joer.2024.77067.1177

Abstract

Selecting the optimal capital structure is a crucial decision for company managers as it significantly influences both the firm's value and shareholders' wealth. This study aims to identify the factors affecting capital structure (financial leverage), with a particular focus on uncertainties at ... Read More Selecting the optimal capital structure is a crucial decision for company managers as it significantly influences both the firm's value and shareholders' wealth. This study aims to identify the factors affecting capital structure (financial leverage), with a particular focus on uncertainties at both industry and company levels, utilizing a multilevel panel model. Data from 151 companies listed on the Tehran Stock Exchange across 26 industries were collected over a 14-year period from 1387 to 1401. R software was utilized to estimate the volatilities of stock price volatility and industry indices, followed by the estimation of the multilevel panel model using Stata software. The findings reveal several key insights: first, uncertainties at the industry level exhibit a negative and significant impact on leverage, whereas uncertainties at the company level do not demonstrate statistical significance. Second, Q-Tobin exerts a positive and significant effect, while variables such as cash flow, profitability, tangible assets, and the market-to-book value ratio have a negative and significant influence on leverage. Third, incorporating different levels and accounting for the stochastic component in the estimated coefficients of variables enhances the explanatory power of the model, thus indicating the superiority of the multilevel panel model over the fixed effects panel model.IntroductionOptimal allocation of financial resources is imperative for preserving value, fostering growth, and facilitating the development of companies. Financing methods, whether through debt (financial leverage) or equity, carry their own set of advantages and disadvantages. Financial leverage, defined as the ratio of debt to assets, necessitates prudent decision-making to mitigate risks such as the potential for bankruptcy. Various factors contribute to differing financial leverage ratios among companies, with some stemming from firm-specific characteristics and others from macroeconomic variables.Uncertainty emerges as a significant determinant influencing firms' financial decisions. This study focuses on assessing the impact of company-specific uncertainty, measured through stock return volatilities, while also examining uncertainty at the industry level using a stochastic volatility approach. By exploring these uncertainties, this research seeks to shed light on their implications for capital structure decisions.Methods and MaterialThe research methodology involves employing the stochastic volatility (SV) method to estimate company-specific uncertainty and uncertainty at the industry level. Additionally, the multi-level panel method is utilized to explore variations in financing among companies across different industry levels.Results and DiscussionThis research examines the impact of company-specific uncertainty on financial leverage, considering the significance of financing decisions. Data from 151 companies listed on the Tehran Stock Exchange from 1387 to 1401 were utilized, with the stochastic volatility model employed to estimate company and industry-specific uncertainties. Subsequently, the influence of these uncertainties, alongside other pertinent variables at the company and macroeconomic levels, on leverage was investigated using multi-level panel models. Six levels were considered, including: (1) unsuccesses to account for the company level, (2) unsuccesses to consider the industry level, (3) unsuccesses to incorporate the stochastic component in the Q-Tobin coefficient at the company level (incorporating the previous two levels), (4) unsuccesses to incorporate the stochastic component in the profitability coefficient at the company level (incorporating the previous three levels), (5) unsuccesses to incorporate the stochastic component in inflation and growth at the company level (incorporating the previous four levels), and (6) unsuccesses to incorporate the stochastic component in inflation and growth at the industry level (incorporating the previous five levels). The significance of each level was assessed through relevant tests. Table1variableModel1Model2Model3Model4Model5Model6Qtobin0/0036(0/0035)0/0044(0/0018)0/0155(0/0036)0/0161(0/0036)0/0155(0/0052)0/0157(0/0048)Prof-0/7354(0/0000)-0/8504(0/0000)-0/7411(0/0000)-0/7224(0/0000)-0/7175(0/0000)-0/7217(0/0000)MTB-3/39e-14(0/0230)-4/40e-14(0/0107)-4/01e-14(0/0020)-3/96e-14(0.0022)-3/73e-14(0/0036)-4/00e-14(0/0018)CF-0/0084(0/0089)-0/0138(0/0002)-0/0099(0/0003)-0/0091(0/0006)-0/0092(0/0005)-0/0090(0/0006)Tang-0/2393(0/0000)-0/1022(0/0001)-0/2634(0/0000)-0/2523(0/0000)-0/2460(0/0000)-0/2420(0/0000)CV-Co-7/79e-06(0/9860)-0/0004(0/3283)-1/42e-05(0/9706)-0/0001(0/7858)-0/0001(0/7726)-8/13e-05(0/8274)CV-In-0/0042(0/0045)-0/0039(0/0254)-0/0044(0/0012)-0/0043(0/0010)-0/0043(0/0009)-0/0043(0/0011)Inflation-0/0783(0/0000)-0/0382(0/2177)-0/1036(0/0000)-0/1032(0/0000)-0/1016(0/0001)-0/1095(0/0030)Growth-0/0048(0/0000)-0/0043(0/0018)-0/0052(0/0000)-0/0050(0/0000)-0/0049(0/0000)-0/0052(0/0002)Constant0/7805(0/0000)0/7195(0/0000)0/7384(0/0000)0/7347(0/0000)0/7335(0/0000)0/7305(0/0000)Source; research findingsResults indicate that company-specific uncertainty does not significantly influence leverage, whereas industry-level uncertainty exhibits a negative and significant effect on financial leverage. Additionally, the Q-Tobin variable demonstrates a positive and significant effect, while variables including growth rate, inflation rate, profitability, market-to-book value ratio, cash flow, and asset visibility exhibit a negative and significant impact on financial leverage.ConclusionGiven the substantial implications of financing decisions on a company's prospects, value, and shareholders' wealth, attention to variables affecting financial leverage and uncertainties in this domain is crucial. This study underscores the importance of understanding and incorporating both company-specific and industry-level uncertainties in financial decision-making processes.This research delved into the impact of specific uncertainty at both the company and industry levels, alongside other influential variables at the company and macroeconomic levels, on financial leverage. The findings indicate that while company-specific uncertainty does not exert a significant effect on leverage, industry-level uncertainty demonstrates a notable negative impact on financial leverage. Furthermore, the Q-Tobin variable exhibits a positive and significant effect, while variables such as growth rate, inflation rate, profitability, market-to-book value ratio, cash flow, and asset visibility demonstrate a negative and significant influence on financial leverage.

Estimating the Volume of Goods Smuggling Using Structural Equations and its Impact on Economic Growth in Iran: An Empirical Study in the Last Half Century

Mansour Zarra Nezhad; Maryam Karimi kanouleh; Salah Eebrahimi

Volume 23, Issue 89 , July 2023, Pages 90-130

https://doi.org/10.22054/joer.2024.75290.1155

Abstract

Examining the factors affecting the smuggling of goods as well as its effects on macroeconomic variables has been one of the most important issues in the field of macroeconomics. Examining this issue and its results has an important role in policy making in the field of goods smuggling. Considering ... Read More Examining the factors affecting the smuggling of goods as well as its effects on macroeconomic variables has been one of the most important issues in the field of macroeconomics. Examining this issue and its results has an important role in policy making in the field of goods smuggling. Considering this issue, the purpose of this article is to investigate the economic smuggling of goods as one of the obstacles to production using an empirical approach. Therefore, in this study, in addition to estimating the volume of smuggling in Iran during the period from 1971 to 2020, and investigating its impact on the gross domestic product, structural equation modeling was used. The findings of this study show that the average volume of goods smuggling in the period under review was about 22.53% of the official GDP. Also, based on other results of this study, smuggling as an obstacle to production has had a negative and significant impact on GDP at the 95% confidence level over the past 50 years. IntroductionSmuggling of goods is a part of economic activities that shows its presence in society with an invisible hand. Smuggling of goods is not registered in the official statistics and causes part of the economic performance to be hidden. This issue makes statistics and economic data unclear and reduces the efficiency of the available information due to the concealment of part of the economic performance. Smuggling of goods is done with the aim of avoiding paying taxes and bypassing border controls. Smuggling causes the government to be deprived of a large part of its tax revenues, and the government may face challenges in providing funds and paying the government's consumption and capital expenditures. A reduction in tax revenue can hinder the government's ability to provide essential services such as health care, education, and infrastructure that are critical to sustainable economic growth. Also, due to the fact that contraband does not pay import taxes and other official business costs, it will have a competitive advantage over official importers and domestic producers. This issue can cause a decrease in the level of domestic production and a negative impact on economic growth. Smuggling of goods can also undermine the effectiveness of official and governance institutions. Informal businesses, such as smuggling, often operate outside legal frameworks, which can erode trust in the government and the formal sector. Weak institutions can discourage foreign investment, hinder economic development, and negatively affect GDP growth. Also, the smuggling of goods will cause the transfer of a part of the labor force from the formal market to the informal market and will disrupt the supply of labor in the formal sector, which may increase the cost of hiring labor and reduce the producer's profit margin. In general, by depriving the government of a large part of the tax revenues, smuggling of goods poses a challenge to investment in infrastructure and will have negative effects on production in the long run. Considering this issue, the main question of this research is what is the amount of smuggling in Iran and how does it affect the GDP?Methods and Material Due to the fact that goods smuggling is a hidden variable and is not recorded in official statistics, in this study, the method of multiple indicators and multiple causes (MIMIC), which is a special form of structural equation modeling, was used to estimate the volume of goods smuggling in Iran and its effect on the gross domestic product will be investigated. In this study, according to the structure of the model and research objectives, many models will be examined and analyzed, and finally, the model that is in a better condition in terms of significance and fit indices of Lisrel has been selected as the superior model. In the next section, according to the optimal model, the smuggling index is calculated and by using calibration, this index will be expressed as a percentage of GDP.Results and DiscussionAnalysis of the model and its estimation has been done using Lisrel software. The results of the Optimal model have shown that the variables of income distribution inequality, tax burden, unemployment rate and inflation rate have been the most important determinants of goods smuggling in Iran. Based on the calibration and calculation of the volume of smuggling for the years under review, the volume of smuggling in the period under review as a percentage of GDP was 22.53%. Also, the lowest amount of smuggling volume was related to 1361 with about 15.59% of GDP. Also, based on the estimated results, smuggling of goods has a very high correlation with the unemployment rate and inflation. This shows the importance of price stability and employment in the economy to control the amount of smuggling and reduce its negative effects on economic growth.ConclusionThe findings of this study hioghlight the persistent high volume of goods smuggling in Iran, despite extensive measures aimed at control and reduction. Using the capacity of border markets, creating employment and developing economic infrastructure in the border provinces-where most smuggling is detected- could be effective strategies for mitigating this issue. Also, the stability of prices and financing the government's budget deficit from sources that have less inflationary effects can be useful in reducing the tendency to smuggle goods. Finally, improving the business environment and reducing the costs of official trade can reduce the profit margin of smuggling goods and cause an increase in the trend towards imports and official exports instead of smuggling trade.

Estimation of Outage Losses Due to Dust Phenomenon

Asharaf-sadat Pasandideh; Maryam Keyghobadi; Iraj Pourkeivani

Volume 23, Issue 89 , July 2023, Pages 131-167

https://doi.org/10.22054/joer.2024.76516.1162

Abstract

Climate change and drought have intensified significantly in recent decades across the country, leading to the proliferation of dust storms in various regions, including in Khuzestan province. One of the adverse effects of dust storms is affecting the power grid and even causing blackouts in some ... Read More Climate change and drought have intensified significantly in recent decades across the country, leading to the proliferation of dust storms in various regions, including in Khuzestan province. One of the adverse effects of dust storms is affecting the power grid and even causing blackouts in some cases. A disaster that occurred in February 2017 in Khuzestan province and had numerous economic consequences. This article proposes a model to estimate the costs associated with power outages. The proxy method is employed to quantify these costs, encompassing lost production for various industrial, agricultural, and public sectors, as well as lost utility for residential customers and revenue losses for electricity companies in Khuzestan province. The results indicate that the damages and costs to the society due to the lost production in medium load are equal to 2597 billion Rials and the damage caused by unsold electricity, which is a kind of damage to the electric companies of Khuzestan province, in medium load. It was equal to 32.4 billion rials. Considering the amount of damage, it is concluded that planning the stability of the country's electricity network, especially in areas prone to dust phenomenon, should be given serious attention. Introduction Among energy carriers, electricity has a special place as secondary energy. Electricity supply is the economic foundation of an industrial country, so that without electricity, industries will not be able to produce, and citizens will not have tools for comfort (Kenward & Raja, 2014). Khuzestan province is considered as the economic and industrial hub of Iran, so after Tehran, it has the largest share in the country's gross domestic product. The existence of major and vital industries such as oil, gas, petrochemicals, and steel are examples of economic and industrial activities in this province. According to the explanations mentioned at the beginning about the importance of electricity in economic and industrial life, the stability of the electricity network in Khuzestan province is very important. Khuzestan electricity network with more than 12,000 Megawatts of power generation capacity and more than 8,000 Kilometers of transmission and distribution network circuits and 200 substations has a high rank in terms of importance in the country's electricity network. But what has affected the stability of this network in the past years is the destructive phenomenon of dust storms. One of the cases that caused widespread disruption in the electricity network of Khuzestan was a heavy dust storm that happened in February 2017, the concentration of dust on this day was 9985 micrograms per cubic meter and 66 times the permissible limit, and due to the high humidity of 90 % caused the electricity of Ahvaz city and parts of Khuzestan province to be cut off. As a result of these blackouts, the drinking water supply system, telecommunication system, mobile phone, internet, etc. were disrupted and administrative and educational centers were closed, crude oil production stopped at some point. Due to the large scale of the disaster, it was necessary to calculate its damages in a study, and this article is organized accordingly. This research aims to determine the importance of electricity supply stability in the country, especially in Khuzestan province. Methods and Material The purpose of this study is to calculate the costs of power outages in February 2017 in Khuzestan province. These costs are divided into two parts, the first part is related to the costs of unsupplied electricity due to blackouts, which are actually incurred by the electricity supply companies in Khuzestan. The second part is also related to the calculation of the costs that society suffered due to blackouts. The sum of these two parts results in the total cost of damages caused by blackouts in February 2017 in Khuzestan province. In this research, in order to calculate the costs of the disaster, the proxy method was chosen. With the help of representative variables, that is, the average electricity tariff, lost production, and lost leisure, and depending on the duration of the blackout, blackout costs are obtained. Results and Discussion The main goal of this research was to introduce a framework for calculating damages caused by power outages. In this research, with the help of the representative method and the value of unsupplied electricity, a comprehensive model was used to calculate the blackout costs in Khuzestan province in February 2017. The sum of the costs calculated in two parts, i.e. damage caused by unsupplied electricity and damage caused by lost production, shows the total costs of electricity outages in Khuzestan province. At the same time, it should be noted that the damage caused to the society (industries, businesses, and households) is much more than the damage to the electricity supply, so it is necessary to invest in the maintenance and promotion of sustainable electricity supply in Khuzestan province. By strengthening the power grid in the event of repeated dust storms, the grid will not collapse and extensive damage will be prevented (Figure 1). Figure 1: Comparison of costs of unsupplied electricity and lost production due to outages) in billions of Rials) Power outage reported Min power load Average power load Conclusion The findings of this research and similar cases can inform policy-making and decisions within the electricity industry in several key areas: Ensuring the security of electricity supply in Khuzestan province, Managing potential outages effectively, Exploring energy pricing options, Developing standards and guidelines within the Ministry of Energy and its subsidiaries for calculating the damages from power outages during crises, Assessing the long-term costs associated with power outages.

Plenty of Natural Resources and the Financial Development and Economic Growth Nexus: Role of Investment

Majid Aghaei; Saeed Rasekhi; Sara Rangber

Volume 23, Issue 89 , July 2023, Pages 168-218

https://doi.org/10.22054/joer.2024.75088.1150

Abstract

Despite relative development in financial institutions, and the abundance of financial resources (income from oil sales), Iran has still struggled to experience high and sustainable economic growth rates, even experiencing negative growth rates in recent years. Therefore, investigating the ... Read More Despite relative development in financial institutions, and the abundance of financial resources (income from oil sales), Iran has still struggled to experience high and sustainable economic growth rates, even experiencing negative growth rates in recent years. Therefore, investigating the influential factors in the relationship between financial development and economic growth is crucial. Accordingly, this study examines the role and significance of oil resources (oil course) on the relationship between financial development and economic growth through investment channels using the ARDL bounding test during the period from 1980 to 2020. The findings indicate that while financial development positively and significantly impacts investment, the oil curse weakens this relationship, suggesting an indirect negative impact of the oil curse on the financial development-economic growth nexus via investment channels in Iran. The interactive variable of financial development and the oil curse also had a negative and significant impact on investment during the examined period, indicating the financial system's inability to allocate resources effectively towards productive investments. Based on these results, it can be stated that the oil curse has affected the functioning of the financial sector in the Iranian economy and, by making this sector inefficient, has had a negative impact on investment, thus weakening the relationship between economic growth and financial development. Introduction Natural resources are considered one of the most important national wealth assets globally. Initially, it may be presumed that abundant revenues from natural resources can generate wealth for a country, leading to economic progress and poverty reduction, thus serving as a significant factor in accelerating investment and subsequent economic growth. However, empirical observations in some cases contradict this claim (Sachs and Warner, 2001; Saleh et al., 2020). The detrimental effect of governments' dependence on natural resource revenues has long been of interest to economists and policymakers. Experience shows that natural wealth alone is neither a necessary nor a sufficient factor for economic prosperity and advancement, as evidenced by affluent countries such as Hong Kong, Japan, Singapore, and Switzerland, which have not derived their national wealth from natural resources (Abeysinghe, 2001). Studies indicate that the common denominator among all countries that have benefited greatly from natural resources is the presence of a well-functioning and institutionalized financial system, which channels revenues from natural resources towards productive and infrastructural investments, thereby promoting production growth. Revenues derived from natural resources, given the development of institutions and financial institutions, and overall financial system development, are effectively allocated to productive economic investments. With increased investment in infrastructure, it strengthens the relationship between financial development and economic growth. On the other hand, abundant revenues from natural resources, if not optimally allocated, can weaken the relationship between financial development and economic growth (Nili & Rastad, 2007). Despite possessing abundant income from natural resources, Iran experienced unstable economic growth over the past three decades. Considering that most studies conducted in Iran have acknowledged the positive relationship between financial development and economic growth, awareness of the profound effects of natural resources on the relationship between financial development and economic growth appears essential for adopting appropriate policies. Therefore, this study endeavors to investigate and analyze the impact of natural resources on the relationship between economic growth and financial development through investment channels. Top of Form Methods and Material Considering previous studies such as Sachs and Warner (1999), Harchaoui et al. (2005), Nili and Rastad (2007), and Badiab et al. (2016), along with the theoretical foundations of the research, the model under investigation in this study is based on the neoclassical growth framework. The research modeling will be conducted in several stages using various equations to achieve the main research objective. Initially, the direct impact of oil dependency (resource curse) on economic growth will be examined. Subsequently, in order to investigate the role of investment in the relationship between financial development and economic growth in Iran, the role of investment will be explored, taking into account the influence of oil dependency (resource curse) on this relationship. The degree of indirect influence of oil dependency (resource curse) on the relationship between financial development and economic growth will be determined through the investment channel. To analyze the empirical long-run and short-run relationship between the model variables during the period from 1980 to 2020 in this study, the Autoregressive Distributed Lag (ARDL) method, introduced by Pesaran et al. (2001), will be utilized. Results and Discussion The results obtained from the research indicate that financial development has had a positive impact on economic growth during the examined period, but it is not statistically significant. However, the impact of natural resource abundance and per capita capital on economic growth during the examined period is positive and significant. The estimation of influential factors on investment reveals a positive and significant effect of financial development on investment during the examined period. Furthermore, the coefficient of the interactive variable between financial development and the resource curse suggests that the resource curse weakens the negative relationship between financial development and investment in Iran. This indicates the indirect impact of the resource curse on the relationship between financial development and economic growth through investment in Iran. The interactive variable of financial development and the resource curse also has a negative and significant impact on investment, suggesting that an increase in financial development in the long run leads to a reduction in the positive impact of natural resource abundance on investment in Iran. Conclusion Based on the results, it can be said that the financial and banking system in Iran has not been able to channel oil revenues towards productive activities effectively, and resource allocation has not been adequately addressed. The presence of the resource curse has indirectly affected the financial sector, resulting in negative impacts on investment and consequently on the relationship between economic growth and financial development. Additionally, natural resource abundance alone has a positive and significant impact on investment. With increasing oil revenues, government infrastructure expenditures and loans to the private sector also increase, leading to increased investment. Based on the results obtained, signs of the resource curse in the Iranian economy are observable indirectly, and the resource curse has weakened the relationship between financial development and economic growth. Policy recommendations include focusing on developing the financial system and enhancing the efficiency of the banking sector to better direct financial resources towards productive investments. Additionally, diversifying the economy and developing various sectors, such as industry, services, and agriculture, are crucial to mitigating the risks associated with the resource curse.This can be achieved by increasing the efficiency of financial institutions through enhancing education and efficient resource management.

Strategic Analysis of the Economic Role of the Government in Education with an Emphasis on Islamic Perspective

Abbas Ramezani; Ladan Hajianvari

Volume 23, Issue 89 , July 2023, Pages 219-250

https://doi.org/10.22054/joer.2024.77112.1181

Abstract

Education has gained increasing significance from various perspectives, particularly in terms of economics. It can be argued that education constitutes the largest portion of public expenditure worldwide. Few individuals, having examined the direct and indirect social and private benefits of education—including ... Read More Education has gained increasing significance from various perspectives, particularly in terms of economics. It can be argued that education constitutes the largest portion of public expenditure worldwide. Few individuals, having examined the direct and indirect social and private benefits of education—including both public and higher education—regard investment in education as useless or of little utility. However, there remains a gap in research regarding the roles of governments and the private sector in education, especially concerning Islamic perspectives. The aim of this qualitative research is to analyze the economic role of the government in education with an emphasis on Islamic viewpoints. In this regard, semi-structured interviews were conducted with 15 education economics experts who were purposefully selected using snowball sampling until data saturation was achieved. The content of interviews was analyzed to elicit themes that can be used in a SWOT matrix. The findings indicate that government involvement in education presents strengths, weaknesses, opportunities, and threats, emphasizing the importance of collaborative financing by both public and private sectors. With such cooperation, governments and markets can address current shortcomings and contribute to enhancing the quality of education. Introduction Since education is supposed to be a key factor in economic development (Shehbazi & Moradimokhles, 2019), governments have focused on reforming their policies related to public schools (McGregor, 1994). The role of the government in the economy has always been a subject of serious debates. The assessment of its benefits and drawbacks varies depending on the background of each specialist, including their intellectual and philosophical views as well as political affiliations. Generally, governments tend to play a more active role in the production and distribution of public goods, while they do not feel the same level of responsibility towards private goods (Emadzadeh, 2003). Accordingly, it can be argued that one of the recognized roles of the government in the economy is the provision of public goods (Stiglitz & Rosengard, 2015), which are collectively consumed and accessible to all segments of society. The government endeavors to produce and distribute these goods for the benefit of the general public (Vizi, 1982). In Islam, access to education is considered a fundamental right for all individuals (Derikvand, 2021). The provision of high-quality education for everyone is essential, and as government expenditures continue to rise, governments alone may struggle to address this issue. Hence, there is a growing need for the private sector and public involvement in education, as supported by Islamic teachings emphasizing shared responsibilities and cooperation (Ma'idah: 2; Nahj al-Balagha 216). While governments are responsible for ensuring access to education for all, the oversight of private educational institutions by regulatory bodies is increasingly important. Education can be viewed as a semi-private commodity with a balanced perspective (Emadzadeh, 2012), highlighting the collaborative roles of society and government in monitoring the activities of private schools. Therefore, the aim of the current study is to analyze the limitations and gaps in the government's economic involvement in education from an Islamic perspective, considering the specific conditions in Iran. The study seeks to identify the opportunities, threats, weaknesses, and strengths associated with such governmental support. Methods and Material The current study utilized a qualitative approach to gather insights on the economic role of the government in education from an Islamic viewpoint. Initially, definitions, analyses, concepts, and theoretical foundations were derived from a review of relevant literature. Subsequently, the perspectives of experts in the field were explored through semi-structured interviews comprising 5 key questions. The participants included 8 faculty members specializing in economics, experts in the economics of education, 5 Ph.D. students in economics and educational management, and 2 additional experts in the economics of education. The selection of participants was based on purposeful snowball sampling until data saturation was achieved, at which point sampling ceased. The interviews' text was extracted and analyzed to identify themes, examples, strengths, weaknesses, opportunities, and threats related to the government's economic involvement in education, with a focus on Islamic viewpoints. The review and analysis of the interview texts were conducted meticulously. To ensure the accuracy and validity of the analysis, the opinions of five experts, who were faculty members specialized in educational economics or general economics, were sought. Results and Discussion The strengths, weaknesses, opportunities, and threats (SWOT) of the government's economic involvement in education, focusing on Islamic viewpoints, were identified through the analysis of interview data. The findings were summarized in Table 1. Based on the SWOT analysis, a total of 18 strategies were identified, comprising 4 SO strategies, 5 ST strategies, 4 WO strategies, and 5 WT strategies as outlined in Table 1. In order to compile the list of preferred strategies, the strategies derived from the most frequently identified strengths, weaknesses, opportunities, and threats were initially considered. Subsequently, these strategies were reviewed by five experts who were academic faculty members specializing in the economics of education. Due to the presence of overlapping strategies and the operational nature of some, the experts involved in this research selected a total of 7 preferred strategies with high frequency for inclusion in the list of executive programs and initiatives. Increasing the allocation of funds for education in the public budget and gross domestic product. Adapting to changes in government policies and laws related to the economics of education, and developing strategic plans for better alignment. Developing policies and guidelines for collaboration with the private sector based on Islamic principles. Offering incentives to encourage private sector investment in education. Enhancing budget optimization and detailed financial planning, while increasing collaboration with relevant government and private entities to improve educational access for all. Forming partnerships with the private sector to leverage their expertise and knowledge. Strengthening the relationship between the government and society through transparency, adequate information dissemination, and building societal trust. Conclusion The findings indicate that the limited budget allocated by the government for education, as one of the country's strategic and vital institutions, coupled with the heavy reliance of the state economy on oil and the absence of alternative sources, including those within the private sector, can contribute to the current funding challenges in education. However, the government's economic role in education is crucial, and this responsibility should not be solely entrusted to the private sector. Ensuring adequate financial resources, investing in educational infrastructure, enhancing the quality of education, and promoting equal access to education for all individuals are key actions that the government must actively pursue. Simultaneously, its role should shift from direct provision to regulation and oversight. Given the insufficient resources available within the state education system, it is advisable for the Islamic government to not only cover public education expenses but also create opportunities for public participation (Ma'idah: 2) in this regard. Based on the analysis of the opinions of the experts participating in this study, it is recommended that the government enhance its regulatory and supervisory role by establishing independent monitoring mechanisms and formulating relevant policies and laws based on authentic Islamic viewpoints. Due to the semi-privatization of education goods and services, and considering the the insights from the SWOT analysis conducted in this research, it is evident that a collaborative effort between the public and private sectors is crucial for financing of education. This approach would allow both the government and the market to address their respective weaknesses and leverage their strengths. By involving the private sector, the financial resources required to achieve the goal of universal education can be secured. Additionally, individuals would play a more active role in overseeing and managing their children's educational matters, turning education into a societal endeavor. Simultaneously, government involvement would help mitigate market deficiencies, ensuring a more equitable distribution of educational services. Through strategic partnerships and regulatory frameworks, governments can ensure that educational outcomes align with societal values and priorities.

An Investigation on the Effect of Tax Avoidance on the Transparency of Financial Reporting Firms Listed in Tehran Stock Exchange

Omid Pour-heidari; Mohammad Hasan Fadavi; Meysam Amini-nia

Volume 14, Issue 52 , April 2014, , Pages 85-69

Abstract

Abstract In this paper, the impact of tax avoidance on the transparency of financial reporting of firms listed in Tehran Stock Exchange is investigated. The indexes that are used to measure tax avoidance and financial reporting transparency are respectively effective tax rate and accruals quality. The ... Read More

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Volume 2, Issue 7 , January 2003, , Pages 165-199

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Volume 5, Issue 18 , October 2005, , Pages 13-47

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The concept and measurement of economic Resilience

abolfazl ghiasvand; fatemeh abdolshah

Volume 15, Issue 59 , January 2016, , Pages 161-187

Abstract

In this paper, resilience of an economic system is measured by an overall index, based on the Borman et al. index, for the period of 1996-2013. The results are then compared with Briguglio index. To measure the final index, the first step is to make variables have a similar direction. The second step ... Read More

Study of Correlation between Volatility of Stock, Exchange and Gold Coin Markets in Iran with DCC-GARCH Model

Firouz Fallahi; Jafar Hghighat; Naser Sanoubar; Khalil Jahangiri

Volume 14, Issue 52 , April 2014, , Pages 147-123

Abstract

Abstract The aim of this paper is to investigate the behavior of stock, exchange and gold coin markets and their correlations structure by using the DCC-GARCH model and the daily data for the period from 23 July 2011 to 22 September 2013 in Iran. Results show that there is a high correlation between ... Read More

The impact of covid-19 and good governance on income inequality in selected oil exporting countries

parisa moghadasi; Sajjad Faraji Dizaji; Abbas Assari Arani

Articles in Press, Accepted Manuscript, Available Online from 29 January 2024

https://doi.org/10.22054/joer.2024.74874.1158

Abstract

Income inequality is one of the important and key issues in the economy, which, considering its function and consequences, can affect people's health in various ways and endanger the stability and stability of the socio-economic system. Today, most countries suffer from inequality in the distribution ... Read More

Money and Monetary Economics

Examining the Equity premium puzzle in Iran: a practical approach using a Dynamic Stochastic General Equilibrium Model

sahar zare joneghani; Bahram sahabi; hassan heydari; Mehdi Zolfaghari

Articles in Press, Accepted Manuscript, Available Online from 29 June 2024

https://doi.org/10.22054/joer.2024.76901.1171

Abstract

The equity premium is obtained from the difference between the return on the risky stock asset and the return on the risk-free asset; the failure of financial theory to explain high equity premium is known as the equity premium puzzle. This puzzle was introduced for the first time by Mehra and Prescott ... Read More

The Economics of Technology, Energy and Sustainable Development

Analysis of Russia's asymmetric Behavior in the GECF and World gas Market

Yaghoub Andayesh; Amir Hossein Montazer Hojat; Eshagh Qasemi

Articles in Press, Accepted Manuscript, Available Online from 02 July 2024

https://doi.org/10.22054/joer.2024.77053.1175

Abstract

Russia’s Position in the world gas Market and common membership of Russia with Iran has given importance to Analysis of Russia's asymmetric behavior productive in the world gas market. Russia’s Position in the global gas Market and it’s excessive capacity in gas production provides ... Read More

Public Sector Economics

Non-linear approach of currency market pressure and real prices of food, metals, ‎energy and raw materials in the countries that export food, metals, energy and raw ‎materials: soft panel regression approach

aso esmailpour

Articles in Press, Accepted Manuscript, Available Online from 21 July 2024

https://doi.org/10.22054/joer.2024.78536.1204

Abstract

In this article, the foreign exchange market index (EMP) in the countries that ‎export metals, spices, raw materials and energy during the period of ‎‏1990‏‎-‎‏2020‏‎ by ‎applying the simple panel transition regression model (PSTR), two regimes on the real ‎price ... Read More

View Article

The effect of age and gender on social preferences in Iran

habib morovat

Articles in Press, Accepted Manuscript, Available Online from 21 July 2024

https://doi.org/10.22054/joer.2024.77385.1187

Abstract

An extensive and growing literature has documented the existence of social preferences, their economic and political consequences, and the various conditions under which they affect the equilibrium and outcomes of human interactions. In this research, by using the Global Preferences Survey (GPS) data, ... Read More

View Article

Financial Economics

Risk Modeling of Stocks of Large Companies in the Tehran Stock Exchange; A Multivariate Factor Stochastic Volatility Approach

Reza Talebloo; parisa mohajeri; Mortaza Yeganeh

Articles in Press, Accepted Manuscript, Available Online from 10 September 2024

https://doi.org/10.22054/joer.2024.77305.1184

Abstract

The aim of the current research is to present a model for the risk analysis of 30 large companies in the Tehran Stock Exchange using the multivariate factor stochastic volatility model (MFSVM) in the framework of the non-linear state-space approach. In this framework, the volatility of stock returns ... Read More

The Economy of Iran

Investigating the Role of Social Capital in the Interaction between Physical Capital and Iran's GDP using the Soft Transition Regression (STR) model

Sholeh Bagheri Pormehr; Zahra Laki; Hanieh Parnyan

Articles in Press, Accepted Manuscript, Available Online from 10 September 2024

https://doi.org/10.22054/joer.2024.77437.1190

Abstract

The basic questions of economic growth models, including the relationship between types of capital and the rate of real growth, have always been a concern of scientific and political circles. In many empirical studies, it has been shown that physical capital and social capital each affect the amount ... Read More

Public Sector Economics

The role of organizing informal street businesses in the development of food tourism with the approach of urban economy sustainability (case study: Tehran city)

Sogol Shahidi; Davood Abbasi Karjagan; Seyyed Mohsen Tabatabaei Mozdabadi

Articles in Press, Accepted Manuscript, Available Online from 17 September 2024

https://doi.org/10.22054/joer.2024.79835.1219

Abstract

The present study aims to investigate the role of organizing informal street businesses in the development of food tourism. The statistical population of the research included tourists and street food visitors from the tourist destination of Tehran, and the number of samples was calculated based on the ... Read More

The Economy of Iran

Value Added Decomposition of Iran's Gross Exports of Economic Activities

Esfandiar Jahangard; Alireza Jahangard; Negar Ebrahimi

Articles in Press, Accepted Manuscript, Available Online from 21 October 2024

https://doi.org/10.22054/joer.2024.78216.1201

Abstract

In recent years, with increased access to relevant data and statistics, especially inter-country input-output tables and micro-level data within companies, as well as advancements in computer data processing capabilities for managing these vast datasets and information and communication infrastructure, ... Read More

Financial Economics

Investigating Factors Affecting the Success of the Initial Coin Offering Method by Logistic Regression

Fatemeh Teimoora; kazem yavari

Articles in Press, Accepted Manuscript, Available Online from 21 October 2024

https://doi.org/10.22054/joer.2024.77481.1191

Abstract

Financing is always one of the most important issues of businesses. The Initial Coin Offering method is a new way of financing businesses based on blockchain technology. This method has been noticed due to its potential in attracting high capital from all over the world in a short period and in absent ... Read More

Number of Issues	87
Article View	1,029,184
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View Per Article	1361.35
PDF Download Per Article	1267.39
Number of Submissions	1,239
Rejected Submissions	771
Reject Rate	62
Accepted Submissions	232
Acceptance Rate	19
Time to Accept (Days)	342
Number of Indexing Databases	15
Number of Reviewers	499

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Volume 8 (2008)

Volume 7 (2007)

Volume 6 (2006)

Volume 5 (2005)

Volume 4 (2004)

Volume 3 (2003)

Volume 2 (2002)

Volume 1 (2001)

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