Investigating the Non-Linear Relationship between the Stock Market and Iran's Economic Growth: The Autoregressive Model Approach with a Distributed Interval

Document Type : Original Article

Authors

1 PhD student in Economics, Department of Economics and Management, Urmia University

2 Assistant Professor of Economics, Economics and Management, Urmia University, Urmia

3 Graduated Economic science from Mazandaran University (Babolsar)

4 Graduate of Economic Development and Planning, Bu Ali Sina University (Hamadan)

Abstract

The impact of international financial markets on development as well as their impact on economic growth in developed economies has caused emerging financial markets to become one of the topics of concern for researchers and economists, especially during the recent economic crises in most countries. The capital market as an economic institution plays the main role in increasing the efficiency and optimal allocation of capital, as well as providing the possibility of financing new projects and development plans and other operations in companies and the government; Therefore, studying the relationship between the capital market and economic growth is of particular importance. Therefore, the present study examines the existence of an inverted U relationship between the capital market and economic growth, as well as the effect of the stock market on Iran's economic growth during the period of 1975-2018 using autoregression with distributional lag (ARDL).The results obtained from the above model show that in the short and long term, the inverted U relationship between the financial sector and economic growth has the correct sign and is significant, but it does not have a necessary and sufficient condition; It was also found that the capital market had a positive and significant effect on Iran's economic growth in the short and long term. In addition, capital stock, education and government spending have had a positive and significant effect on Iran's economic growth.

Keywords

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Budget and Finance Strategic Research
Volume 3, Issue 2 - Serial Number 10
Summer Quarterly
November 2022
Pages 111-149

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  • Receive Date: 06 June 2022
  • Revise Date: 20 July 2022
  • Accept Date: 01 August 2022

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