IDEAS home Printed from https://ideas.repec.org/a/eco/journ1/2017-04-33.html
   My bibliography  Save this article

Relationship Between Domestic Production in Agricultural and Industrial Sectors and Purchasing Power by Controlling for International Trade Variables (Iran)

Author

Listed:
  • Maryam Almasifard

    (Texas Tech University, United States,)

  • Sasan Torabzadeh Khorasani

    (Texas Tech University, United States,)

Abstract

Foreign trade is one of the important subjects in any economy. Due to the close relationship between economy, technology, culture, and governance, business has a significant effect on economies. This study analyses the relationship between domestic production and purchasing power which is proxied by inflation rate by considering certain indexes of intranational trade. Our targeted country is Iran and data are between 1973 and 2013. Because of limited access to data our sample size was small which motivate us to use auto-regressive distributed lag (ARDL) technique that is appropriate for the small sample size analysis. The estimated coefficient of gross domestic product, value-added agriculture and industry were negative and significant. Therefore, it was claimed that there is a negative and significant relationship between domestic production and purchasing power which is proxied by inflation rate by controlling for certain variables of international trade.

Suggested Citation

  • Maryam Almasifard & Sasan Torabzadeh Khorasani, 2017. "Relationship Between Domestic Production in Agricultural and Industrial Sectors and Purchasing Power by Controlling for International Trade Variables (Iran)," International Journal of Economics and Financial Issues, Econjournals, vol. 7(4), pages 244-253.
    • Handle: RePEc:eco:journ1:2017-04-33
    as

    Download full text from publisher

    File URL: https://www.econjournals.com/index.php/ijefi/article/download/4998/pdf
    Download Restriction: no
    File URL: https://www.econjournals.com/index.php/ijefi/article/view/4998/pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Badi Baltagi & Panicos Demetriades & Siong Hook Law, 2007. "Financial Development, Openness and Institutions: Evidence from Panel Data," Money Macro and Finance (MMF) Research Group Conference 2006 166, Money Macro and Finance Research Group.
    2. Baltagi, Badi H. & Demetriades, Panicos O. & Law, Siong Hook, 2009. "Financial development and openness: Evidence from panel data," Journal of Development Economics, Elsevier, vol. 89(2), pages 285-296, July.
    3. Judith Giles & Cara Williams, 2001. "Export-led growth: a survey of the empirical literature and some non-causality results. Part 1," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 9(3), pages 261-337.
    4. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    5. Joachim Wagner, 2016. "Exports and Productivity: A Survey of the Evidence from Firm Level Data," World Scientific Book Chapters, in: Microeconometrics of International Trade, chapter 1, pages 3-41, World Scientific Publishing Co. Pte. Ltd..
    6. C. Michael Wernerheim, 2000. "Cointegration and causality in the exports-GDP nexus: The post-war evidence for Canada," Empirical Economics, Springer, vol. 25(1), pages 111-125.
    7. Guglielmo Barone & Federico Cingano, 2011. "Service Regulation and Growth: Evidence from OECD Countries," Economic Journal, Royal Economic Society, vol. 121(555), pages 931-957, September.
    8. Chow, Peter C. Y., 1987. "Causality between export growth and industrial development : Empirial evidence from the NICs," Journal of Development Economics, Elsevier, vol. 26(1), pages 55-63, June.
    9. Kazem Yavari & Reza Mohseni, 2012. "Trade liberalization and economic growth: a case study of Iran," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 15(1), pages 13-23.
    10. Marin, Dalia, 1992. "Is the Export-Led.Growth Hypothesis Valid for Industrialized Countries?," The Review of Economics and Statistics, MIT Press, vol. 74(4), pages 678-688, November.
    11. Kletzer, Kenneth & Bardhan, Pranab, 1987. "Credit markets and patterns of international trade," Journal of Development Economics, Elsevier, vol. 27(1-2), pages 57-70, October.
    12. Azmat Gani & Biman Chand Prasad, 2006. "Institutional Quality and Trade in Pacific Island Countries," ARTNeT Working Papers 20, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    13. Miller, Stephen M. & Upadhyay, Mukti P., 2000. "The effects of openness, trade orientation, and human capital on total factor productivity," Journal of Development Economics, Elsevier, vol. 63(2), pages 399-423, December.
    14. Jeffrey A. Frankel & David Romer, 1996. "Trade and Growth: An Empirical Investigation," NBER Working Papers 5476, National Bureau of Economic Research, Inc.
    15. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    16. Siong Hook Law, 2007. "Openness and Financial Development," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 6(2), pages 145-165, May.
    17. Azmat Gani & Biman Chand Prasad, 2006. "Institutional Quality and Trade in Pacific Island Countries," Working Papers 2006, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada..
    18. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
    19. Kazem Yavari & Reza Mohseni, 2012. "Trade liberalization and economic growth: a case study of Iran," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 15(1), pages 13-23, March.
    20. L Alan Winters, 2004. "Trade Liberalisation and Economic Performance: An Overview," Economic Journal, Royal Economic Society, vol. 114(493), pages 4-21, February.
    21. Greenaway, David & Morgan, Wyn & Wright, Peter, 2002. "Trade liberalisation and growth in developing countries," Journal of Development Economics, Elsevier, vol. 67(1), pages 229-244, February.
    22. Dollar, David, 1992. "Outward-Oriented Developing Economies Really Do Grow More Rapidly: Evidence from 95 LDCs, 1976-1985," Economic Development and Cultural Change, University of Chicago Press, vol. 40(3), pages 523-544, April.
    23. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    24. Alesina, Alberto & Wacziarg, Romain, 1998. "Openness, country size and government," Journal of Public Economics, Elsevier, vol. 69(3), pages 305-321, September.
    25. Shang-Jin Wei, 1996. "Intra-National versus International Trade: How Stubborn are Nations in Global Integration?," NBER Working Papers 5531, National Bureau of Economic Research, Inc.
    26. Ana Cuadros & Vicente Orts & Maite Alguacil, 2004. "Openness and Growth: Re-Examining Foreign Direct Investment, Trade and Output Linkages in Latin America," Journal of Development Studies, Taylor & Francis Journals, vol. 40(4), pages 167-192.
    27. Judith Giles & Cara Williams, 2001. "Export-led growth: a survey of the empirical literature and some non-causality results. Part 1," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 9(3), pages 261-337.
    28. David Dollar & Aart Kraay, 2004. "Trade, Growth, and Poverty," Economic Journal, Royal Economic Society, vol. 114(493), pages 22-49, February.
    29. Beck, Thorsten, 2002. "Financial development and international trade: Is there a link?," Journal of International Economics, Elsevier, vol. 57(1), pages 107-131, June.
    30. Ahmed, Faisal Z. & Greenleaf, Anne & Sacks, Audrey, 2014. "The Paradox of Export Growth in Areas of Weak Governance: The Case of the Ready Made Garment Sector in Bangladesh," World Development, Elsevier, vol. 56(C), pages 258-271.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rahman, Mohammad Mafizur & Mamun, Shamsul Arifeen Khan, 2016. "Energy use, international trade and economic growth nexus in Australia: New evidence from an extended growth model," Renewable and Sustainable Energy Reviews, Elsevier, vol. 64(C), pages 806-816.
    2. Shahbaz, Muhammad & Mohammad, Mafizur Rahman, 2014. "The Dynamics of Exports, Financial Development and Economic Growth in Pakistan: New Extensions from Cointegration and Causality Analysis," MPRA Paper 53225, University Library of Munich, Germany, revised 19 Jan 2014.
    3. Tarlok Singh, 2010. "Does International Trade Cause Economic Growth? A Survey," The World Economy, Wiley Blackwell, vol. 33(11), pages 1517-1564, November.
    4. Hakimi, Abdelaziz & Hamdi, Helmi, 2016. "Trade liberalization, FDI inflows, environmental quality and economic growth: A comparative analysis between Tunisia and Morocco," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 1445-1456.
    5. Harrison, Ann & Rodríguez-Clare, Andrés, 2010. "Trade, Foreign Investment, and Industrial Policy for Developing Countries," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4039-4214, Elsevier.
    6. Muhammad, Shahbaz & Mohammad, Mafizur Rahman & Abdul, Farooq, 2012. "Financial Development, International Trade and Economic Growth in Australia:New Evidence from Multivariate Framework Analysis," MPRA Paper 42023, University Library of Munich, Germany, revised 17 Oct 2012.
    7. Isabel Cortes-Jimenez & Manuela Pulina, 2006. "Tourism and Growth: Evidence for Spain and Italy," ERSA conference papers ersa06p128, European Regional Science Association.
    8. Cortes-Jimenez, Isabel & Pulina, Manuela, 2006. "A further step into the ELGH and TLGH for Spain and Italy," Natural Resources Management Working Papers 12137, Fondazione Eni Enrico Mattei (FEEM).
    9. Gries, Thomas & Kraft, Manfred & Meierrieks, Daniel, 2009. "Linkages Between Financial Deepening, Trade Openness, and Economic Development: Causality Evidence from Sub-Saharan Africa," World Development, Elsevier, vol. 37(12), pages 1849-1860, December.
    10. Hian Teck HOON & Frank S T Hsiao & Mei-Chu Wang Hsiao, 2020. "FDI, Exports, and GDP in East and Southeast Asia — Panel Data versus Time-Series Causality Analyses," World Scientific Book Chapters, in: Development Strategies of Open Economies Cases from Emerging East and Southeast Asia, chapter 4, pages 81-129, World Scientific Publishing Co. Pte. Ltd..
    11. Fakhri J. Hasanov & Muhammad Javid & Frederick L. Joutz, 2022. "Saudi Non-Oil Exports before and after COVID-19: Historical Impacts of Determinants and Scenario Analysis," Sustainability, MDPI, vol. 14(4), pages 1-38, February.
    12. Utku Utkulu & Durmus Özdemir, 2005. "Does Trade Liberalization Cause a Long Run Economic Growth in Turkey," Economic Change and Restructuring, Springer, vol. 37(3), pages 245-266, September.
    13. N. R. Ramírez-Rondán & Marco E. Terrones & Andrea Vilchez, 2020. "Does financial sector development affect the growth gains from trade openness?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 156(3), pages 475-515, August.
    14. Riad Sultan, 2012. "An Econometric Study of Economic Growth, Energy and Exports in Mauritius: Implications for Trade and Climate Policy," International Journal of Energy Economics and Policy, Econjournals, vol. 2(4), pages 225-237.
    15. Ritu Rani & Naresh Kumar, 2018. "Panel Data Analysis of Financial Development, Trade Openness, and Economic Growth: Evidence from BRICS Countries," Emerging Economy Studies, International Management Institute, vol. 4(1), pages 1-18, May.
    16. María Soledad Feal Zubimendi, 2008. "Crecimiento económico y apertura comercial: análisis de la influencia de los canales," Estudios Economicos, Universidad Nacional del Sur, Departamento de Economia, vol. 25(50), pages 37-73, January-j.
    17. L. G. Burange & Rucha R. Ranadive & Neha N. Karnik, 2019. "Trade Openness and Economic Growth Nexus: A Case Study of BRICS," Foreign Trade Review, , vol. 54(1), pages 1-15, February.
    18. Aamer Abu-Qarn & Suleiman Abu-Bader, 2004. "The validity of the ELG hypothesis in the MENA region: cointegration and error correction model analysis," Applied Economics, Taylor & Francis Journals, vol. 36(15), pages 1685-1695.
    19. Raghutla CHANDRASHEKAR & T. SAMPATH & Krishna Reddy CHITTEDI, 2018. "Financial development, trade openness and growth in India," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(614), S), pages 113-124, Spring.
    20. Tiba, Sofien & Frikha, Mohamed, 2019. "The controversy of the resource curse and the environment in the SDGs background: The African context," Resources Policy, Elsevier, vol. 62(C), pages 437-452.

    More about this item

    Keywords

    International Trade; Inflation Rate; Purchasing Power;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eco:journ1:2017-04-33. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ilhan Ozturk (email available below). General contact details of provider: http://www.econjournals.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.