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The Impact of Financial Stress on Iran per Capita GDP over the Period 2000(3)-2011(1)

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  • Khazalipoor , Nasrin

    (Isfahan (Khorasgan) Branch, Islamic Azad University)

  • Ranjbar , Homayoun

    (Department of Economics, Isfahan (Khorasgan) Branch, Islamic Azad University)

Abstract

Stress in financial markets influences economic agents' behavior by creating uncertainty and changing the expectations. Critical financial stress can lead to financial crisis. Financial crises are among the events always present in the world economy. Iran is not an exception. This paper aims to study the impact of financial stresses on Iran's per capita GDP. By using ARDL (Auto Regressive Distributed Lags), the effects of financial stress indices, including foreign currency, stock, and banking markets on Iran's GDP per capita is estimated. Our findings show that financial stresses in currency market and stock market have positive and negative effects on economic growth respectively. Banking stresses have a positive influence on economic growth. The cumulative impact of financial stresses is positive on Iran's economy, but is different from the effect of banking stresses with respect to intensity.

Suggested Citation

  • Khazalipoor , Nasrin & Ranjbar , Homayoun, 2014. "The Impact of Financial Stress on Iran per Capita GDP over the Period 2000(3)-2011(1)," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 9(2), pages 117-137, October.
    • Handle: RePEc:mbr:jmonec:v:9:y:2014:i:2:p:117-137
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    References listed on IDEAS

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    More about this item

    Keywords

    Financial crisis; Banking crisis; Stock crisis; Currency crisis; Economic growth; ARDL model;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G01 - Financial Economics - - General - - - Financial Crises
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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