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

Nasrin Khazalipoor () and Homayoun Ranjbar ()
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Nasrin Khazalipoor : Isfahan (Khorasgan) Branch, Islamic Azad University
Homayoun Ranjbar : Department of Economics, Isfahan (Khorasgan) Branch, Islamic Azad University

Journal of Money and Economy, 2014, vol. 9, issue 2, 117-137

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.

Keywords: Financial crisis; Banking crisis; Stock crisis; Currency crisis; Economic growth; ARDL model (search for similar items in EconPapers)
JEL-codes: E44 G01 O11 O16 (search for similar items in EconPapers)
Date: 2014
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