The effects of macroeconomic (monetary, fiscal, and exchange rate) and trade policies on indicators of sustainable development in Iran

Document Type : Research Paper


1 Department of Economics, Abarkouh Branch, Islamic Azad University, Abarkouh, Iran.

2 Faculty of Economics, Management and Accounting, Yazd University, Yazd, Iran


The current uncertainties regarding the fragile recovery of the global economy continue to highlight the importance of studying and accurately predicting the path of leading indicators, especially macroeconomic indicators. Nevertheless, for all developed and developing countries, one of the basic goals of macroeconomic policies is to ensure economic stability and stability. The purpose of this research is to investigate the impact of monetary, financial, foreign exchange and commercial policies on a sustainable economy. In this regard, the variables of wide money supply, credits allocated to the private sector, exchange rate, trade openness, cash liabilities, government expenditures and the market value of companies admitted to the stock exchange are used. The data were extracted from the World Bank database and applied to time series data econometric techniques. Also, the autoregressive model with distributed lags (ARDL) analyzed the data for the years 1990-2020. The findings of the research show that the real exchange rate, wide money supply, cash liabilities and commercial openness has a negative and significant impact on economic stability in the short and long term, but the variable of credits allocated to the private sector has a positive effect on the variable. has been affiliated Also, government spending and the market value of listed companies have a negative effect in the short term, but have a positive effect on the stable economy in the long term. Therefore, in addition to active macroeconomic policies, countries should use a wide range of supportive political interventions to achieve a stable economy, which include a specific combination of commercial, financial and currency policies.


[1] R.A. Ajisafe and B.A. Folorunso, The relative effectiveness of fiscal and monetary policy in macroeconomic management in Nigeria, Afr. Econ. Bus. Rev. 3 (2002), no. 1, 23–40.
[2] L.C. Andersen and J.L. Jordan, Monetary and fiscal actions: A test of their relative importance in economic stabilization, Review, 1968.
[3] G. Anna, The relative effectiveness of monetary and fiscal policies on economic activity in zimbabwe 1981:4- 1998:3): An error correction approach, Int. J. Manag. Sci. Bus. Res. 1 (2012), no. 5, 1–35.
[4] M.J. Artis, A.R. Nobay, The attempt to reinstate money, in Johnson, H.G. and Associates (ed.), Readings in British Monetary Economics, Clarendon Press, Oxford, 1972, pp. 67–89.
[5] A.D. Basiago, Methods of defining ‘sustainability’, Sustain. Dev. 3 (1995), no. 3, 109–119.
[6] T. Bayramoˇglu, Biyok¨utle enerjisi ve yerel ekonomik kalkınma, (Birinci Basım) ˙Imaj Yayınları. Beck T (2011) Finance and oil: is there a resource curse in financial development? Discussion Paper No. 2011-017 Center for Economic Research, Tilburg University, 2014.
[7] M.A. Beigee and A.M. Jalaee, The effect of trade spillovers and foreign direct investment on the economic growth of OPEC countries; With a spatial panel econometric approach, J. Econ. Res. 21(2021), no. 82, 197–233.
[8] M. Belloumi and A. Alshehry, The impact of international trade on sustainable development in saudi arabia, Sustainability 12 (2020), no. 13, 5421.
[9] N. Bose, M.E. Haque and D. R. Osborn, Public expenditure and economic growth: A disaggregated analysis for developing countries, Manchester School 75 (2007), no. 5, 533–556.
[10] H. Briassoulis, Sustainable development and its indicators: through a (Planner’s) glass darkly, J. Envir. Plan. Manag. 44(2001), no. 3 409—427.
[11] T. C¸ elik, B. C¸ elik and D. Barak, Real exchange rate and economic growth relationship in transition economies, Suleyman Demirel Univer. J. Faculty Econ. Admin. Sci. 22 (2017), no. 3, 877–890.
[12] M. C¸ etin, Teori ve uygulamada b¨olgesel s¨urdur¨ulebilir kalkınma, C.U. ˙Iktisad. ˙Idari Bilim. Dergisi, 7 (2006), no. 1, 1–19.
[13] N. Chambers, C. Simmons, M. Wackernagel, Sharing nature’s interest: Ecological footprints as an indicator of sustainability, Earthscan Publications, 2014.
[14] A.R. Chowdhury, Monetary and fiscal impacts on economic activities in Bangladesh, A note, Bangl. Dev. Stud. 14 (1986), no. 2, 101–106.
[15] Y. Coskun and O. Umit, Cointegration analysis between stock exchange and TL/FX saving deposits, gold, housing markets in Turkey, Bus. Econ. Res. J. 7 (2016), no. 1, 47-–69.
[16] J. Cottani, C. Domingo and M.K. Shahbaz, Real exchange rate behavior and economic performance in LDCs, Econ. Dev. Cultural Change 39 (1990), no. 1, 61–76.
[17] A.F. Darratt, The dominant influence on fiscal actions in developing countries, Eastern Econ. J. 10 (1984), no, 3, 271–284.
[18] S. Derissen, M. Quaas and S. Baumg¨artner, What is sustainability economics?, University of L¨uneburg Work. Paper Ser. Econ. (2009), no. 138.
[19] A. Durmaz and T. Bayramo˘glu, Sustainablity in Economics, EE Ba¸sar & T. Bayramo˘glu, 2017.
[20] J.W. Elliott, The influence of monetary and fiscal actions on total spending: The St. Louis Total spending equation revisited, J. Money Credit Bank. 7 (1975), 181–192.
[21] A. Erfani and A. Talebbeydokhti, The investigation of the role of monetary policy and financial leverage on financial stability in the economy of Iran, J. Appl. Econ. Stud. Iran 6 (2017), no. 24, 75–94.
[22] C. Ezigbo, Justification and implication of macroeconomic management for sustainable development, J. Econ. Sustain. Dev. 3 (2012), no. 11, 72–82.
[23] O.E. Falade and B.A. Folorunso, Fiscal and monetary policy instruments and economic growth sustainability in Nigeria, Amer. J. Econ. 5 (2015), no. 6, 587–594.
[24] B.T. Gukat and I. Ogboru, An empirical analysis of government expenditure and economic growth in Nigeria, J. Econ. Dev. Stud. 5 (2017), no. 4, 122–134.
[25] E. Han and A.A. Kaya, Kalkınma ekonomisi teori ve politika. 6. printing, Nobel Yayın Da˘gıtım-Ankara, 2008.
[26] N. Heyzer and S. Mochida, The global economic and financial crisis: Regional impacts, responses and solutions, United Nations Publications, New York, 2009.
[27] M. Hussain, (1982)The relative effectiveness of monetary and fiscal policy: An econometricCase study of pakistan, Pakistan Econ. Soc. Rev. 20 (1982), no. 2, 159–181.
[28] M. Idris and R. Bakar, Public sector spending and economic growth in Nigeria: In search of a stable relationship, Asian Res. J. Arts Soc. Sci. 3 (2017), no. 2, 1–19.
[29] I. Ihsan and S. Anjum, (2013)Impact of money supply (M2) on GDP of pakistan, Glob. J. Manag. Bus. Res. Finance 13 (2013), no. 10, 1–8.
[30] O.A. Ihugba and A.C. Njoku, Social and community services government expenditure and Nigeria’s economic growth, Tsounis N., Vlachvei A. (eds) Advances in Applied Economic Research, Springer Proceedings in Business and Economics, Springer, Cham, 2017.
[31] M.S. Islam, M.E. Hossain, S. Chakrobortty and N.S. Ema, Does the monetary policy have any short-run and long-run effect on economic growth? A developing and a developed country perspective, Asian J. Econ. Bank. 6 (2022), no. 1, 26–49.
[32] S.M.N. Islam, M. Munasinghe and M. Clarke, Making long-term economic growth more sustainable: Evaluating the costs and benefits, Ecologic. Econ. 47 (2003), no. 2-3, 149–166.
[33] A. Jibir and C. Aluthge, Modeling the determinants of government expenditure in nigeria, Cogent Econ. Finance 7 (2019), no. 1.
[34] A. Jibir, H. Babayo, Impact of government expenditure and economic growth: Empirical evidence from nigeria, IOSR J. Econ. Finance 3(2015), no. 2, 61–68.
[35] O. Karahan, ¨ Influence of exchange rate on the economic growth in the Turkish economy, Financ. Assets Invest. 11(2020), no. 1, 21–34.
[36] M. Kaynak, Kalkınma ˙Iktisadı, Gazi Kitabevi, Ankara, 2011.
[37] D. Kiseˇl´akov´a, P. Filip, E. Onuferova and T. Valentiny, The impact of monetary policies on the sustainable economic and financial development in the euro area countries, Sustainability 12 (2020), no. 22, 9367.
[38] T. Kirsanova, C. Leith, S. Wren-Lewis, Monetary and fiscal policy interaction: The current consensus assignment in the light of recent developments, Econ. J. 119 (2009), no. 541 F482-–F496.
[39] K. Kriskkumar N.A.M., Naseem and W.N.W. Azman-Saini, Investigating the asymmetric effect of oil price on the economic growth in malaysia: applying augmented ARDL and nonlinear ARDL techniques, SAGE Open 12 (2022), no. 1.
[40] H. Mahmood, A.H. Adow, M. Abbas, A. Iqbal, M. Murshed and M. Furqan, The fiscal and monetary policies and environment in GCC countries: analysis of territory and consumption-based CO2 emissions, Sustainability 14 (2022), no. 3, 1225.
[41] T. Mahmood and M.H. Sial, The relative effectiveness of monetary and fiscal policies in economic growth: A case study of pakistan, Asian Econ. Financ. Rev. 1 (2011), no. 4, 236–244.
[42] L.M. Marques, J.A. Fuinhas and A.C. Marques, Does the stock market cause economic growth? Portuguese evidence of economic regime change, Econ. Model. 32 (2013), 316—324.
[43] S.M. Monfared,T. Mohammadi, M. Khazri, U. Prior, The role of financial development in the effectiveness of monetary policy in determining output and inflation, Econ. Model. Sci. Quart. 15 (2021), no. 55, 51–80.
[44] M. Noferesti, Studying the impact of monetary and exchange rate policies on economy of Iran, J. Econ. Res. 40(2005), no. 3.
[45] K.O. Obi, J.O. Oniore and K.U. Nnadi, the impact of exchange rate regimes on economic growth in nigeria, J. Econ. Sustain. Dev. 7 (2016), no. 12, 115–127.
[46] D.O. Olayungbo, O.F. OlayemI, Dynamic relationships among non-oil revenue, government spending and economic growth in an oil producing country: Evidence from Nigeria, Future Bus. J. 4 (2018), no. 2, 246–260.
[47] D. Olowu, M. Laleye, V. Ayeni, Monograph series on administrative responses to the African economic Crisis: The case of Nigeria, Nairobi, Kenya: African Association for Public Administration and Management, 2007.
[48] A. Orji, D.O. Ekeocha, J.E. Ogbuabor, O.I. Anthony-Orji, Monetary policy channels, sectoral outputs and sustainable growth in the ECOWAS region: a rigorous analysis and implications for policy, Economia 2022.
[49] A.K. Poddar N.J. Hunking, The relative importance of monetary and fiscal policy: An econometric case study of Canada, Indian Econ. J. 18 (1971), no. 4, 460–474.
[50] K. Prakash, A. Scott and M.E. Terrones, From recession to recovery: How soon and how strong?, World Econ. Outlook 3 (2009), no. 3, 103–138.
[51] H. Rajabpour, F. Momeni and A. Nasiri Aghdam, Evaluating the effect of financial policy on inclusive development in Iran, svar approach, Economic Res. Iran, 2021.
[52] S.I. Rodriguez, Sustainability assessment and reporting for the University of Michigan’s Ann Arbor Campus, Center for Sustainable Systems, Report No. CSS02-04 University of Michigan, Ann Arbor, Michigan, 2002.
[53] D. Rodrik, One economics, many recipes: Globalization, institutions and economic growth, One Economics, Many Recipes: Globalization, Institutions, and Economic Growth, 2007.
[54] R. Sathiendrakumar, Sustainable development: Passing fad or potential reality?, Int. J. Soc. Econ. 23 (1996), no. 4/5/6, 151–163.
[55] D. Senbet, The relative impact of fiscal versus monetary actions on output: A vector autoregressive (VAR) approach, Bus. Econ. J. (2011), 1–11.
[56] S. Setoodeh nia and F. Abedi, The impact of fiscal and monetary policies on fiscal consolidation in Iran, Quart. J. Macro Strategic Policies 1 (2013), no. 1-3, 103–115.
[57] A. Shahid, I. Somia and A. Asghar, Whether fiscal stance or monetary policy is effective for economic growth in the case of south Asian countries?, Pakistan Dev. Rev. 47 (2008), no. 4, 791–799.
[58] I. Simorangkir and J. Adamanti, The role of fiscal stimulus and monetary easing in Indonesian economy during global financial crisis: Financial computable general equilibrium approach, Bull. Monetary Econ. Bank. 13 (2010), no. 2, 165–186.
[59] P. Srinivasan, Causality between public expenditure and economic growth: the Indian case, J. Econ. Manag. 7 (2013), no. 2, 335–340.
[60] C.T. Tan, A. Mohamed, M.S. Habibullah and L. Chin, The impacts of monetary and fiscal policies on economic growth in Malaysia, Singapore and Thailand, South Asian J. Macroecon. Public Finance 9 (2020), no. 1, 114–130.
[61] V. Tomsik, Some insights into monetary and fiscal policy interactions in the Czech Republic, BIS Paper (2012), no. 67j.
[62] A. Usman, H.I. Mobolaji, A.A. Kilishi, M.A. Yaru and T.A. Yakubu, Public expenditure and economic growth in Nigeria, Asian Econ. Financ. Rev. 1 (2011), no. 3, 104–113.
[63] J. Wen, H. Mahmood, S. Khalid and M. Zakaria, The impact of financial development on economic indicators: A dynamic panel data analysis, Econ. Res. Ekon. Istraˇz. 35 (2021), no. 1, 2930–2942.
[64] S. Yapraklı, Enerjiye dayalı b¨uy¨ume: T¨urk sanayi sekt¨or¨u ¨uzerinde uygulamalar, Beta Kitabevi. Basım. ˙Istanbul, 2013.
Volume 14, Issue 3
March 2023
Pages 73-86
  • Receive Date: 03 June 2022
  • Revise Date: 18 August 2022
  • Accept Date: 20 August 2022
  • First Publish Date: 23 February 2023