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A Discussion on the Effects of Currency Crises on the Real Sector of Iran’s Economy: The Reaction of Productivity, Employment and Economic Growth
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Ali Vakili1   , Ebrahim Rezaei 2, Farhad Ghafari3 |
1- PhD student, Department of Economics, Faculty of Management and Economics, Science and Research Unit, Islamic Azad University, Tehran, Iran.
2- Associate Professor and member of the academic staff of Human Sciences Research and Development Institute, Semat Organization, Tehran, Iran , Ebrahim.rezaei@gmail.com
3- Associate Professor and member of the Faculty of Economics, Faculty of Management and Economics, Science and Research Unit, Islamic Azad University, Tehran, Iran |
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Abstract: (1116 Views) |
Crises stemming from the financial sector of economy and their possible effects on the structures of the real sector of economy including total factor productivity (TFP), labor productivity, employment and economic growth are the principal problem statement of the present study. To analyze of this problem two non-linear models have been specified. Both of them employ Iran’s macro data as well as indices generated using approaches like State-space models, over the 1985-2020 period. The first model, utilizing Markov-Switching model, beside the covering of the the crisis effects, captures the dynamics and persistence of the shocks on the dependent variable. The second one, for the robustness checking of the previous model, tries to narrow its concentration on, and by a general and theoretical specification examines, the non-linear effects of the independent variables. This model is estimated using non-linear least squares (NLS) estimators.
Study results, verifying the dynamics of all dependent variables, show that both models highlight the negative and significant effect of the currency crisis. Also, the persistence of the adverse effects cannot be rejected. Under the second model when the interrelation effect of currency crisis and credit contractions is included into the model the effects become more deteriorating. Furthermore, the nonlinear effect of research and development and mitigating heinous effects of crisis by other controlling variables cannot be rejected. Theses results have some saliant policy implications for Iran’s Economy. |
Article number: 4 |
| Keywords: Currency Crises, Productivity, Employment, State-space model, Kalman-filter, non-linear least squares (NLS), Markov-Switching model. |
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Full-Text [PDF 1155 kb]
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Article type: Research |
Subject:
Special
Received: 2022/07/16 | Accepted: 2022/09/1 | Published: 2023/03/1
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