The Financial Development and Agriculture Growth in Iran: ARDL Approach

SOHEILA KHOSHNEVIS YAZDI, BAHMAN KHANALIZADEH

Journal:

Recent Advances in Energy, Environment and Financial Planning

Year:2014

Abstract:

The importance of the agricultural surplus for structural transformation that accompanies economic growth is often underscored by development economists. This study examines the causal relationship between the dynamic financial development, economic growth and instability in Iran using annual time series covering the period 1970-2011. The Johansen cointegration test is used to examine the long-run relationship between finance, growth and other variable. The causality of short and long term between these variables is tested using a Granger causality framework and model error (ECM) correction. The results of the model used suggest that there is bidirectional causality between agricultural economic growth and financial development. It is recommended that maintenance of credible macroeconomic policies that is pro-investment; and debt-equity swap option are necessary for agricultural-led economic growth. This study of the implications of policies pay important development policies authorities pay boosts agricultural growth by improving the efficiency of the financial sector.

Keywords: Economic Growth, Financial Development, ARDLApproach,Iran

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