The Effect of Political Management and Economic Stability on Speculation in Iran's Economy

Mohammad Mostafazade (), Parviz Davoodi (), Hossein Samsami () and Aliakbar Arabmazar ()
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Mohammad Mostafazade: PhD Student, Faculty of Economic and Political Sciences, Shahid Beheshti University
Parviz Davoodi: Professor, Faculty of Economic and Political Sciences, Shahid Beheshti University
Hossein Samsami: Assistant Professor, Faculty of Economic and Political Sciences, Shahid Beheshti University
Aliakbar Arabmazar: Professor, Faculty of Economic and Political Sciences, Shahid Beheshti University

Quarterly Journal of Applied Theories of Economics, 2024, vol. 11, issue 1, 175-206

Abstract: Speculation and speculative behaviors leave widespread and often destructive effects on the economy. Speculation, on the one hand, strengthens the unproductive part of the economy and, on the other hand, causes undesirable phenomena such as social dissatisfaction, inequality, inflation, etc. Therefore, the correct and efficient economic policies require control over the influential speculation factors. In this research from 1991 to 2022, a multi-stage quantitative method based on econometric models has to be used. Therefore, the indicators of Speculation, economic instability, and political management were first created using the principal component analysis method. Then, the factors affecting Speculation were estimated using the auto-regressive distributed lag. According to the research results, political management hurts Speculation, and by improving the political management index by one unit, the speculation index decreased by approximately 1.052%. Regarding the economic instability index, it is concluded that its effect on Speculation is positive in the long term, and the impact coefficient is estimated to be more than 0.96. In other words, the increase in economic instability leads to the creation of speculative opportunities and increases in Speculation. In the long term, by creating an atmosphere of uncertainty, the opportunities for rent increase in transactions to earn more profit, and thus, market transactions and speculations increase. In the long term, by creating an atmosphere of uncertainty, the opportunities for rent increase in transactions to earn more profit, and thus, market transactions and speculations increase

Keywords: Political Management; Economic Stability; Good Governance; Unproductive Economy (search for similar items in EconPapers)
JEL-codes: D84 E02 E63 O17 P48 (search for similar items in EconPapers)
Date: 2024
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