Saving structure, housing speculation, and economic growth in the Iranian economy

Yousef Mohammadzaheh () and Arash Refah-Kahriz ()
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Yousef Mohammadzaheh: Urmia University
Arash Refah-Kahriz: Urmia University

Journal of Social and Economic Development, 2023, vol. 25, issue 1, No 10, 170-195

Abstract: Abstract Economic theories argue that saving is a significant financial resource for investment and economic growth; however, its structure has received little scholarly attention. Saving structure could result in undesirable consequences if its structure causes instability in the economy. This study investigates the relationship among saving structure, housing speculation, and economic growth in the Iranian economy from 1970 to 2020. Findings show that saving does not contribute to economic growth in the Iranian economy but directs it to speculative activities in the land and housing market. This speculative behavior increased the housing price index far more than the total price index in this market. In such a situation, it could be challenging to start a business in Iran since land is considerably expensive. Moreover, Iranian households allocate a large proportion of their income to purchasing land and housing. This behavior causes a recession in other sectors of the Iranian economy as well. Although the Iranian economy enjoys a high level of saving and financial resources, it constantly suffers from a budget deficiency for investment since saving is flown toward speculation in the land and housing market.

Keywords: Saving; Economic growth; Housing; Speculation; Iranian economy (search for similar items in EconPapers)
JEL-codes: D14 D84 O16 O47 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s40847-022-00214-z

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