Investigating the Impact of Natural Resource Abundance and Institutional Quality on Economic Growth in Recession and Boom Regimes

Forod Bayat Baghaei (), Roya Seifipour (), Teymor Mohammadi () and Azadeh Mehrabian ()
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Forod Bayat Baghaei: PhD student of Islamic Azad University. Tehran branch
Roya Seifipour: Assistant Professor of Economics, Islamic Azad University,Tehran Branch
Teymor Mohammadi: Professor of Economics, University of Allameh Tabatabai
Azadeh Mehrabian: Professor of Economics, Islamic Azad University, Tehran Branch

Quarterly Journal of Applied Theories of Economics, 2022, vol. 9, issue 3, 231-256

Abstract: The effect of abundance of natural resources on economic performance has been one of the most important topics in recent decades in the country. This issue has always been a source of controversy among experts and economic experts. The noteworthy point is that paying attention to the importance of the role of institutions in economic performance both in general and in detail is agreed by most economic thinkers today. In this study, we seek to investigate the impact of the abundance of natural resources and institutional quality on economic growth in recession and prosperity regimes. For this purpose, the effect of study variables during the period of 1994 to 2020 is investigated by using the rotation model and Markov switching regime change. According to the estimation results of the model, the amount of exposure of the economy in the current research is 10 periods of recession compared to 16 periods of prosperity in the model. Also, according to the estimation results, in the second regime, i.e. the boom period, with the increase in the growth rate of oil revenues and institutional quality, it has led to an increase in the economic growth rate, and in the first regime, i.e. the recession period, it has led to a decrease in the economic growth rate

Keywords: abundance of natural resources; institutional quality; economic growth; Markov switching regime change model (search for similar items in EconPapers)
JEL-codes: C24 E52 G12 G19 G32 (search for similar items in EconPapers)
Date: 2022
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