Examining the causality test of asymmetric effects of financial conditions with GDP growth in line with socio-economic development policies in Iran (Rotational Markov Switching-VAR (MS-VAR) approach)

Subject Areas : Journal of Iranian Social Development Studies

Shirin Aminian ¹ , zohre sadat tabatbainasab ² , Yahya Abtahi ³ , mohamadali dehghantafti ⁴

1 - Department of Economics, Yazd Branch, Islamic Azad University, Yazd, Iran
2 - Department of Economics, Yazd Branch, Islamic Azad University, Yazd, Iran
3 - Department of Economics, Yazd Branch, Islamic Azad University, Yazd, Iran
4 - Department of Economics, Yazd Branch, Islamic Azad University, Yazd, Iran

Received: 2024-06-01 Accepted : 2024-07-27 Published : 2024-06-10

Keywords: Financial conditions, GDP, social development, economic development, Markov switching regime change model - Ver.,

Abstract :

In this study, we seek to examine the causality test of asymmetric effects of financial conditions with GDP growth in line with socio-economic development policies in Iran. For this purpose, the effect of study variables during the period of 1370 to 1400 is investigated by using the Markov Switching-VAR (MS-VAR) rotation model. Based on the results of the analysis of the flow of causality, financial weights are a causal factor of production growth. Therefore, based on the results of the research, there is a one-way flow from the side of financial weights to production growth, and in other words, with a change in financial weights, production growth changes, and thus a vicious cycle is formed in Iran's economy, which after the reduction of oil revenues and According to the national income and the increase in financial burdens, financial burdens in turn cause instability in the entire body of the Iranian economy. Considering the different infrastructures, a separate study of how production is influenced by the uncertainty of the government's monetary policies, government's financial policies, and government's currency policies can provide a correct view of how Iran's financial market changes due to these fluctuations in the country's macro decisions.

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