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Investigating the Interaction Effects of Economic Growth and Happiness in Framework of the Resource Curse Hypothesis and Easterlin Paradox: Dynamic Simultaneous Equations Panel Approach

Document Type : ORIGINAL ARTICLE

Authors

1 Ph.D. in Economics, Faculty of Economics and Entrepreneurship, University of Razi., Kermanshah, Iran

2 Associate Professor, Faculty of Economics and Entrepreneurship, University of Razi., Kermanshah, Iran

Abstract

In this article, the interaction effects of growth and happiness in the framework of a dynamic simultaneous equations panel data model have been considered in the OPEC countries during the period of 2005–2016. Also, according to the resource curse hypothesis, the threshold effects of oil rent on both economic growth and happiness have been tested. The estimation results have indicated that the first lag of happiness has had an insignificant positive impact on economic growth but the first lag of economic growth has had a significant negative impact on happiness. In other words, it can be argued that the benefits of economic growth in the oil oriented countries under this study are not uniformly distributed across all parts of society. Also, in the framework of the mentioned model, the effect of oil rent on happiness and economic growth has been threshold. In other words, before the threshold of 26.25% of the ratio of oil rents to GDP, the oil rent had a positive effect on economic growth, but after the threshold, it had a negative effect on economic growth, which indicates the phenomenon of resource curse in OPEC countries. A similar result has been obtained on the effect of oil rent on happiness, so that before the threshold of 26.92% of the ratio of oil rent to GDP, oil rent has had a positive and significant effect on happiness, but after exceeding this threshold, oil rents have had a negative effect on happiness, which could reflect the existence of the Easterlin paradox in the countries.

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References
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Economic Growth and Development Research
Volume 12, Issue 45
January 2022
Pages 42-31
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History
  • Receive Date: 12 June 2020
  • Revise Date: 21 June 2020
  • Accept Date: 19 July 2020
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