yasaman hokmollahi; ali taiebnia; mohsen mehrara
Abstract
Trade liberalization, both directly and indirectly (through structural changes), affects the total factor productivity. The key factor in determining the direction of this impact is the quality of institutions. In this study, to consider the most important aspects of structural change, we propose a multidimensional ...
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Trade liberalization, both directly and indirectly (through structural changes), affects the total factor productivity. The key factor in determining the direction of this impact is the quality of institutions. In this study, to consider the most important aspects of structural change, we propose a multidimensional index for structural change using the principal component method and then applying the Bayesian averaging method (IVBMA) econometrics model evaluate the effect of trade liberalization, structural changes, and the quality of institutions on total factor productivity in a subsample of 64 countries. our IVBMA results indicate that structural change, business freedom, and resources rents are the most important variables in explaining the observed differences in the total factor productivity index. Structural change with a posterior inclusion probability (PIP) of 0.74 Is the most important independent variable to explain the observed differences in the level of total factor productivity. Increasing the multidimensional index of structural change with a posterior coefficient of 0.14 has a negative effect on total factor productivity. An increase in business freedom index and resources rents leads to 0.39 and 0.22 increase in total factor productivity index. Trade liberalization with a posterior inclusion probability of 0.45 had a positive effect on total factor productivity. Granger causality test also shows that trade liberalization is the cause of structural change; Therefore, trade liberalization in this study has caused structural changes that reduce productivity.Keywords: Structural change, Trade liberalization, Institutions, Productivity
mona beheshti; Abbas memarnejad; taghi torabi; Seyyed Shamseddin Hosseini
Abstract
Abstractthe purpose of this paper is to empirically investigate the direction of causality between financial development, trade liberalization and economic growth in 130 countries including Iran between 2000 and 2017. Cointegration approach, panel vector error correction (PVECM) and Toda-Yamamoto-Dolado-Lutkepohl ...
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Abstractthe purpose of this paper is to empirically investigate the direction of causality between financial development, trade liberalization and economic growth in 130 countries including Iran between 2000 and 2017. Cointegration approach, panel vector error correction (PVECM) and Toda-Yamamoto-Dolado-Lutkepohl causality tests (TYDL) are used in this paper to investigate short - term and long-term causal factors. In order to create the Composite Financial Development index, we used the Principal Components method to present a novel approach. The results indicate that there is a long-term and strong bi - directional causality between all variables in high - income countries and there is a long-term causality in financial development and trade liberalization in form of reducing tariff and non-tariff barriers to economic growth in all groups. We also found that in high income countries, there is a short-term and strong causality in financial development to economic growth. As to study findings, the development of capital markets, the enhancement of their depth and efficiency, and the development of trade liberalization policies and stategies to increade economic growth in long run, recommended for middle income and low income countries. As a middle - income country, economic growth has always been an important objective in Iran. Thus , it seems necessary for country to deepen financial markets and institutions and increase the efficiency of financial markets to benefite from positive long- term effects of financial development on economic growth.Keywords: Financial Development,Vector Eror Correction Model , Trade Liberalization, Eonomic GrowthJEL: F1, F43, C10, G1, G29
