Studying the Effect of Business Cycle on Production, Employment, and Investment in Agricultural Sector of Iran

Document Type : Scientific paper

Authors

1 Ms.c. student, Shahid Bahonar University,Kerman, Iran

2 َAssistant Professor, Ag. Econ. Dept. faculty of Agriculture, Shahid Bahonar University of Kerman, Kerman, Iran

3 Professor at Econ. Dept.Faculty of Agr. & Eco., Shahid Bahonar University of Kerman, Kerman, Iran

Abstract

Business cycle literature is focused on the role of variables such as oil and gas incomes, export fluctuations of oil and gas, budget deficit of the government and liquidity on the business cycle. So far, few studies have been done about the impact of business cycles on agricultural sector. Therefore, in this paper, the long-run business cycles components and irregular shocks have been extracted from real GDP and the effect of business cycle on production, employment and investment in agricultural sector of Iran has been studied. Real GDP over the period of 1973 to 2013 were separated using Hodric-Presscott filter and then the cyclical properties of key variables affecting business cycles were calculated and analyzed. The simultaneous equations method is used to evaluate the impact of business cycles on production, employment and investment in agricultural sector. Results showed that business cycles have had a significant and positive effect on agricultural value added, and   negative effect on employment and investment in agricultural sector. Therefore, it is recommended that in the years of economic prosperity the government should pay more attention to investment in agriculture, so that the economic sector would be a better helping to reduce the price of oil and gas, which is the main cause of economic recession in the country.

Keywords


Arman, A. & Peyrou. F. (2013). Studying the Asymmetry in Business Cycles and the Impact of Oil Shocks on its Creation. Quarterly Journal of Quantitative Economics, 10(4), 113-146. [In Persian]
Ahmad, I., Qayyum, A., & Salam, A. (2008). Dynamic Modeling of Private Investment in Agricultural Sector of Pakistan [with Comments]. The Pakistan Development Review, 4(47), 517-530.
Akbari, N., Sameti, M. &  Hadian, V. (2003). Investigating the Effect of Government Costs on Agricultural Sector Value Added,Agricultural Economics and Development, 41& 42, 137-167. [In Persian]
Amirazodi, A. & Mohamadi, H. (2010). Analysis of the Effect of Monetary and Fiscal Policies on Agricultural Sector Variables,Economic Researches and Policies, 53, 45-58. [In Persian]
Belali, H. & Khalilian, S. (2004). The Impact of Investment on Employment and Labor Demand in Agriculture Sector of Iran, Agricultural Economics and Development, 41 & 42, 117-135.
Central Bank of Iran, Different years. Department of Economic Reviews and Policy. [In Persian]
Esnaashari, A. (2007). The Effects of Monetary and Financial Policies on Agricultural Employment, Ms. C. Thesis, Agricultural Economics, University of Zaboul. [In Persian]
Farjadi, Gh. (1999). Preparation Studies for the Third Economic, Social and Cultural Development Program of the Islamic Republic of Iran. "Organization of the Budget Program, Center for Economic Documents, Tehran. [In Persian]
Gholami, A. & Hozhabr-Kiani, K. (2014). The Study of the Business Cycle in Iran and its Impact on the Efficiency of Financial Stimulus and Investment Programs, Journal of Investment Knowledge, No.12,  253-274. [In Persian]
Greenaway, D., Hine, R. C., & Wright, P. (1999). An Empirical Assessment of the Impact of Trade on Employment in the United Kingdom. European Journal of Political Economy, 3 (15), 485-500.
Hadian, A. & Hashempoor, M. R. (2003). Identifying Business Cycles in Iran's Economy, Quarterly Journal of Iranian Economic Research, No. 15, 23-48. [In Persian]
Hajian, M., Khalilian, S. & Sam-Daliri, A. (2007). The Effect of Monetary and Fiscal Policies on Main Variables of Iran Agriculture Sector, Quarterly Journal of Economic Research, No. 4, 29-45. [In Persian]
Hamidepour, H.Saleh, A. & Yazdani, S. (2010).Investigating the Role of Oil Revenues and Monetary and Fiscal Policies in Iran's Agricultural Sector, Agricultural Economics, No. 4, 29-45. [In Persian]
Hooshmand, M., Falahi, M. A. & Tavakoli-Ghoochani, S. (2008). The Analysis of the Business Cycle in Iran's Economy, Using the Hodic-Prescott Filter. "Science and Development Magazine, 15 (22), 29-55. [In Persian]
Jalaee- Esfandabadi, A. & Javdan, A. (2010). The Effect of Trade Liberalization on Employment in Agricultural Sector of Iran, Agricultural Economics Research, 2(4), 135-150. [In Persian]
Jalaee Esfandabadi, A., Azizi, A., Zareei, N. & Mehrabi- Bosheabadi, H. (2014). The Position of Agricultural Sector in Iran's Business Cycle, Quarterly Economic Modeling, 25(1), 68-82. [In Persian]
Jalaee, A., & Ansarinasab, M. (2016). A Study of True Business Cycles in Iran's Economy, Emphasizing the Factors Affecting the Production Gap. Quarterly Journal of Quantitative Economics (Economic Reviews), 13(3), 85-109. [In Persian]
Jalaee, A., Shekibaee, A. Nejati, M. & Ansarinasab, M. (2016). Factors Affecting the Production Gap in the Iranian Economy. Quarterly Journal of Applied Economics Theory. No. 4, 77-100. [In Persian]
Khaledi, K., Ardestani, M. & Toosi, M. (2007). Investigating the Relationship between Economic Growth, Employment and Exports in Agricultural Sector of Iran (with Emphasis on Foreign Exchange and Trade Policies), Quarterly Agricultural Economics, No. 3, 9-25. [In Persian]
Leung, H. M. (2003). External Debt and Worsening Business Cycles in Less developed Countries. Journal of Economic Studies, 2 (30), 155-168.
Mahmoudgordi, R., Khalilian, S. & Mortazavi, A. (2012). Investigating the Effect of Monetary and Financial Policies on Private Investment in Agricultural Sector of Iran. Agricultural Economics and Development, 20(77), 81-107. [In Persian]
Miyagawa, T., Sakuragawa, Y., & Takizawa, M. (2006). The Impact of Technology Shocks on the Japanese business cycle; An Empirical Analysis Based on Japanese Industry Data. Japan and the World Economy, 4(18), 401-417.
Moosavi, A., Mohamadi, H. & Abdakbari, M. R. (2010). Investigating the Effects of Fiscal Policies on Value Added of Agricultural and Industrial Sectors in Iran, Agricultural Economics Research, 2(4), 121-134. [In Persian]
Moulaee, M. & Golkhandan, A. (2014). Business Cycles of the US Economy and Case Comparison with the Iranian Economy, Quarterly Journal of Economic Research (Growth and Sustainable Development), No. 4, 229-253. [In Persian]
Nabieyan, S. & Sheykhpour, M. (2016). Study of Monetary Shocks on Investment in Agricultural Sub-Sectors of Iran. Agricultural Economics and Development, 24(96), 185-198. [In Persian]
Rafiee, H. & Zibaee, M. (2003). Government Size, Economic Growth and Labor Productivity in Agriculture, Agricultural Economics and Development, 43 & 44, 83-95. [In Persian]
Samadi, S. & Jalaee Esfandabadi, A. (2004). The Analysis of the Business Cycle in the Iran's economy, Journal of Economic Research, No. 66, 139-153. [In Persian]
Sameti, M. & Faramarzpoor, B. (2004).  Investigating the Barriers to Private Investment in Iran's Agricultural Sector, Agricultural Economics and Development, 12(45), 91-112. [In Persian]
Sasuly, M. R. & Saleh, A. (2007). The Impact of Monetary and Fiscal Policies on Value Added of Agricultural Sector of Iran, Agricultural Economics, No.3, 1-13. [In Persian]
Shahaabadi, A. & Mahmoodi, H. (2010). Investigating the Relationship between Variables of Financial Development and Value Added of Iran's Agricultural Sector, Journal of Agricultural Economics and Development (Science and Food Technology), 24(4), 506- 596. [In Persian]
Shahrestani, H. & Arbabi, F. (2009). A General Dynamic Balance Model for the Business Cycle in the Iran's Economy during the Period 1338-1338. Quarterly Journal of Economic Research and Policy, 46, 63- 82. [In Persian]
Sharifzadeh, M. R. & Kagazian, S. (2007). The Factors Affecting Business Cycle in Iran's Economy, Two Quarterly Journal of Economic Research, No. 9, 199- 236. [In Persian]
Shokri, A., Shahnooshi, N., Mohamadzadeh, R. & Aazarinfar, Y. (2009). Factors Affecting Investment in Agricultural Sector of Iran, Agricultural Economics Research, 2(1), 107- 120. [In Persian]
Souri, A. & Keyhani, R. (2004). Population Variables, Government Size and Economic Growth in Iran, Quarterly Journal of Economic Research, No. 9 and 10, 45-61. [In Persian]
Stadler, G. W. (1990). Business Cycle Models with Endogenous Technology. The American Economic Review, 4(80) 763-778.‏
Tancioni, M., & Simonetti, R. (2002). A Macro Econometric Model for the Analysis of the Impact of Technological Change and Trade on Employment. Journal of Interdisciplinary Economics, 1-3(13), 185-221.
Tayebnia, A. & Ghasemi, F. (2010). Measuring Business Cycles in Iran, Journal of Economic Research, No. 92, 183-206. [In Persian]
Yousefi, A, & Jamali, M. (1999). Modeling Value Added and Investing in Iran. Selection of statistical data, No. 50, Statistics Center of Iran. [In Persian]
Zare- Mehrjerdi, M. R., Ziaabadi, M. & Jalaee Esfandabadi, A. (2010). The Impact of Trade Liberalization and Government Size on the Employment of Iran Agricultural Sector, Journal of Agricultural Economics, 4 (4), 65-79. [In Persian]