International Journal of Nonlinear Analysis and Applications

Analyzing the impact of financial repression policies and financial depth on macroeconomic variables in Iran: Simultaneous equations approach

Document Type : Research Paper

Authors

1 Department of Economics, University of Edalat, Iran

2 Jamet al Mostafa University-Humanities Higher Education Complex, Iran

3 Researcher of the Institute of Islamic Science and Culture, Iran

4 Department of Economics, Faculty of Business and Economics, Persian Gulf University, Iran

Abstract

One of the challenges facing economic sectors is providing the required financing and liquidity for fixed investments and current capital (working capital). The current study is aimed to expand such studies in another aspect of the role of financial markets in terms of their relationship with macroeconomic variables such as economic growth rate, unemployment rate, and exchange rate as vital economic variables. Considering the position of the financial system in the allocation and efficiency of financial resources, this study deals with the impact and importance of financial repression policies and financial depth in solving the problems of the unemployment rate, exchange rate, and economic growth rate in Iran with the simultaneous equations approach from 1971 to 2017. The results showed that financial repression and depth policies significantly affect macroeconomic variables (economic growth, unemployment rate, and exchange rate). Furthermore, it is indicated that the financial repression policy does not have a negative effect on economic growth and a positive effect on the unemployment rate; however, it has a positive impact on the exchange rate. In addition, this study unravels that the financial depth policy does not negatively and significantly affect economic growth. However, it positively affects the exchange rate and unemployment rate.

Keywords

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International Journal of Nonlinear Analysis and Applications
Volume 15, Issue 5
May 2024
Pages 155-168
  • Receive Date: 24 November 2022
  • Accept Date: 17 May 2023