Article Sidebar

Submitted
October 21, 2019
Accepted
January 10, 2020
Published
April 8, 2020
Download
PDF
Statistic
Read Counter : 2513 Download : 1743

Downloads

Download data is not yet available.

Main Article Content

Abstract

This study investigates the effect of financial crises on macroeconomic variables that include gross domestic product (GDP), export, inflation, and exchange rates, in some developing countries, namely Iraq, Iran, and Turkey, from 1980 to 2017. In doing so, it performed unit root and cointegration tests and employed generalized least square and panel dynamic least squares estimating methods. Findings/Originality: The empirical results show that the financial crises affect GDP, export, inflation, and exchange rates of the countries at different levels. While the Asian financial crisis shows a significant negative effect on GDP in Iran and Iraq, the global financial crisis exhibits a negative influence on export in all countries. Nevertheless, both Asian and global crises positively affect inflation because financial crises reduce expenditure at the family and government levels. Thus, governments worldwide attempt to minimize the inflation rate.

Keywords

Financial Crisis Macro-economic variables (ARDL EGLS and DOLS) Approach Developing Countries

Article Details

License

Authors who publish with this journal agree to the following terms:

  1. Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution-ShareAlike 4.0 International License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
  2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
  3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).

Creative Commons License

Economic Journal of Emerging Markets by Center for Economic Studies, Universitas Islam Indonesia is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

How to Cite
Ahmed, Y. A., Rostam, B. N., & Mohammed, B. A. (2020). The effect of the financial crisis on macroeconomic variables in Iraq, Iran, and Turkey. Economic Journal of Emerging Markets, 12(1), 54–66. https://doi.org/10.20885/ejem.vol12.iss1.art5
Download Citation
Endnote/Zotero/Mendeley (RIS)
BibTeX

References

  1. Adamu, A. (2009). The effects of Global Financial Crisis on Nigeria Economy. International Journal of Investment and Finance, 1(1&2), 11-21.
  2. Aghighi, Z., Tilenoei, M. H., & Isfahani, S. I. (2016). The Effects of Inflation Rate and Foreign Exchange Rate Changes Due to the Global Financial Crisis on the Financial Performance of Banks Listed on the Tehran Stock Exchange. Jaraaa Journal
  3. Al Karawi, H. M. (2018). Determinants of Economic Growth in Iraq, a standard study for the period (1970 - 2016), (Published Doctoral dissertation), Faculty of Management and Economics, University of Qadisiyah.
  4. Ari, A., & Cergibozanb, R. (2018). Currency crisis in Turkey: An empirical assessment. Research in International Business and Finance 46, 281-293.
  5. Berkmen, P. et al (2009). The global Financial Crisis: Explaining Cross-Country Differences in the Output Impact. IMF Working Paper WP/09/280, Retrieved from https://www.imf.org/external/pubs/ft/wp/2009/wp09280.pdf.
  6. Berument, H., & Pasaogllari, M. (2003). Effects of the real exchange rate on output and inflation: evidence from Turkey. The Developing Economics, 4, 401-435
  7. Catalbas, N. (2016). The Relationship among Nominal Exchange Rate, Import and Export in Turkey for the Period 1988:1 to 2015:3. International Research Journal of Applied Finance, 2229 – 6891.
  8. Cecchetti, S. G., Kohler, M., & Upper, Ch. (2009). Financial Crisis and Economic Activity. National Bureau of Economic Research (NBER) Working Paper Series 15379, Retrieved from https://www.bis.org/publ/othp05.pdf.
  9. Central Bank of Iraq, (2019). Economic and Statistic Data. http://www.cbiraq.org.
  10. Diao, X., Zhang, Y., & Chen, K. Z. (2012). The global recession and China's stimulus package: A general equilibrium assessment of country level impacts. China Economic Review 23, 1-17.
  11. Farzanegan, M. R., & Markwardt, G. (2009). The Effects of Oil Price Shocks on the Iranian Economy. Energy Economics, 31, 134-15.
  12. Fidrmuc, J., & Korhonen, I. (2010). The impact of the global financial crisis on business cycles in Asia emerging economies. Journal of Asian Economics 21, 293-303.
  13. Gilcharist, S. et al (2017). Inflation Dynamics during the financial Crisis. American Economic Review, 107 (3), 785-823.
  14. Gilchrist, S. et al (2017). Inflation Dynamics during the Financial Crisis. American Economic Review, 107 (3): 785-823. DOI: 10.1257/aer.20150248
  15. Goldstein, M., & XIE, D. (2009). The impact of the Financial Crisis on Emerging Asia. Working Paper Series, 1750 Massachusetts Avenue, DC 20036-1903, W P 0 9, Retrieved from https://piie.com/publications/wp/wp09-11.pdf. Hadinejad, M.,
  16. Mohammadi, T., & Shearkhani, S. (2010). Examine the Sanctions' Efficiency on Iran's Non-Oil Trade (Gravity Model). Social Science Electronic Publishing, Inc. Available at SSRN: https://ssrn.com/abstract=1661723.
  17. Jones, S. G., & Ocampo, J., A. (2009). The Financial Crisis and its Impact on Developing Countries. The International Policy Centre for Inclusive Growth is jointly supported by the Poverty Practice, number (53), 1812-108X.
  18. Kamin, S., B. (1999). The current international Crisis: How much is new? Board of Government of the Federal Reserve System. International Finance Working Paper, No. 636, Available at SSRN: https://ssrn.com/abstract=171714 or http://dx.doi.org/10.2139/ssrn.171714.
  19. Katzman, K. (2018). Iran Sanctions, Specialist in Middle Eastern Affairs. Congressional Research Service, https://crsreports.congress.gov.
  20. Klapper, L., & Love, I. (2011). The impact of the financial crisis on new firm registration. Economics Letters. Economics Letters, 113(1), pp.1-4.
  21. Lee, M. (2009). Asian Financial Crisis and Exchange rate Pass-Through in Korea. Review of Applied Economics, 1(1). 37-51.
  22. Li, L., Willett, T., & Zhang, N. (2012). The effects of the Global Financial Crisis on China's Financial Market and Macroeconomy. Economics Research International. Article ID 961694, 6.
  23. Liang, Y. (2012). Global Imbalances and Financial Crisis: Financial Globalization as a Common Cause, Journal of Economic Issues, 46(2), 353-362. DOI: 10.2753/JEI0021-3624460210
  24. Mouna, A., & Anis, J. (2017). Stock Market, Interest Rate and Exchange Rate Risk Effects on non-Financial Stock Return During the Financial Crisis. Journal of the Knowledge Economy, 8(3), 989-915. DOI: 10.1007/s13132-015-0301-4. OEC (2019). [online]. Last accessed 11 February 2019 at: https://atlas.media.mit.edu/en/profile/country/irq/#Exports
  25. Ramli, I. M., et al. (2011). The Impact of Foreign Direct Investment and Exchange Rate on Malaysian Export. Economics and Finance Review, 1(10), 49 – 54.
  26. Rashid, A., & Saedan, B. M. (2013). Financial Crisis and Exchange rate in emerging economies: An empirical analysis using PPP-UIP-Framework, BEH-Business and Economis Horizons, 9(4); 86-96. DOI: http://dx.doi.org/10.15208/beh.2013
  27. Reddy, D., & Lokeswar, V. (2012). Impact of International and GDP on Stock Market Returns in India. International Journal of Advanced Research in Management and Social Sciences. ISSN: 2278-6236.
  28. Rose, A. K., & Spiegel, M. M. (2009). Cross-Country Causes and Consequences of the 2008 Crisis: Early Warning. Federal Reserve Bank of San Francisco Working Paper Series, Retrieved from https://www.frbsf.org/economic-research/files/wp09-17bk.pdf
  29. Shula, K. (2017). The Impact of GDP, Inflation, Interest and Exchange rates GDP on the Stock Market in Zambia Working Paper No. 2. Lusaka, Zambia: Economics Association of Zambia, Retrieved from https://www.academia.edu/32040041/pdf.
  30. Tayebi, S. K., & Yazdani, M. (2014). Financial crisis, oil shock and trade in Asia. Journal of Economic Studies, 41(4); 601-614. DOI https://doi.org/10.1108/JES-04-2011-0053
  31. UNDP (2009). The Financial Crisis and Its Impact on Developing Countries. http://www.undp.org/poverty.
  32. Victor, O. N., & Kuwornu, John K. M., (2011). Analyzing the effect of macroeconomic variables on stock market returns: Evidence from Ghana. Journal of Economics and International Finance 3(11), 605-615.
  33. World Bank data (2019). [online]. Last accessed 17 February 2019 at: https://data.worldbank.org/indicator/NY.EXP.CAPM.KN?locations=IR.
  34. Yurdakul, F. (2014). Factors that Trigger Financial Crises: The Case of Turkey. Procedia-Social and Behavioral Sciences 109, 869-901. 2nd World Conference on Business, Economics and Management -WCBEM 2013. Doi: 10.1016/j.sbspro.2013.12.561
  35. Adamu, A. (2009). The effects of global financial crisis on Nigerian economy. International Journal of Investment and Finance, 1(1&2), 11–21. https://doi.org/10.2139/ssrn.1397232 Aghighi, Z., Tilehnouei, M. H., & Isfahani, S. T. (2016). The effects of inflation rate and foreign exchange rate changes due to the global financial crisis on the financial performance of banks listed on the tehran stock exchange. Journal of Advanced Research in Accounting and Auditing, 1(4), 1–5. Retrieved from https://www.sid.ir/en/journal/ViewPaper.aspx?id=597779 Ari, A., & Cergibozan, R. (2018). Currency crises in Turkey: An empirical assessment. Research in International Business and Finance, 46(C), 281–293. https://doi.org/10.1016/j.ribaf.2018.04.001 Berkmen, S. P., Gelos, G., Rennhack, R., & Walsh, J. P. (2012). The global financial crisis: Explaining cross-country differences in the output impact. Journal of International Money and Finance, 31, 42–59. https://doi.org/10.1016/j.jimonfin.2011.11.002 Catalbas, N. (2016). The relationship among nominal exchange rate, import and export in Turkey for the period 1988:1 to 2015:3. International Research Journal of Applied Finance, VII(4), 11–25. https://doi.org/10.0704/article-1 Cecchetti, S., Kohler, M., & Upper, C. (2009). Financial crises and economic activity (NBER Working Paper Series No. 15379). Cambridge. https://doi.org/10.3386/w15379 Farzanegan, M. R., & Markwardt, G. (2009). The effects of oil price shocks on the Iranian economy. Energy Economics, 31(1), 134–151. https://doi.org/10.1016/j.eneco.2008.09.003. Gilchrist, S., Schoenle, R., Sim, J., & Zakrajšek, E. (2017). Inflation dynamics during the financial crisis. American Economic Review, 107(3), 785–823. https://doi.org/10.1257/aer.20150248 Goldstein, M., & Xie, D. (2009). The impact of the financial crisis on emerging Asia (Peterson Institute for International Economics Working Paper No. 09–11). https://doi.org/10.2139/ssrn.1499875 Griffith-Jones, S., & Ocampo, J. A. (2009). The financial crisis and its impact on developing countries (Working Papers No. 53). International Policy Centre for Inclusive Growth. Retrieved from https://ipcig.org/pub/IPCWorkingPaper53.pdf Hadinejad, M., Mohammad, T., & Shearkhani, S. (2010). 'Examine the sanctions’ efficiency on Iran’s non-oil trade (Gravity Model). New York: Social Science Electronic Publishing, Inc. https://doi.org/10.2139/ssrn.1661723 Kamin, S. B. (1999). The current international financial crisis: How much is new? (Board of Governors of the Federal Reserve System International Finance Working Paper No. 636). https://doi.org/10.2139/ssrn.171714 Katzman, K. (2018). Iran sanctions. Retrieved from https://crsreports.congress.gov/product/pdf/RS/RS20871 Klapper, L., & Love, I. (2011). The impact of the financial crisis on new firm registration. Economics Letters, 113(1), 1–4. https://doi.org/10.1016/j.econlet.2011.05.048 Lee, M. (2005). Asian financial crisis and exchange rate pass-through in Korea. Review of Applied Economics, 01(1), 143484. https://doi.org/10.22004/ag.econ.143484 Li, L., Willett, T. D., & Zhang, N. (2012). The effects of the global financial crisis on China’s financial market and macroeconomy. Economics Research International, 2012, 1–6. https://doi.org/10.1155/2012/961694 Liang, Y. (2012). Global imbalances and financial crisis: Financial globalization as a common cause. Journal of Economic Issues, 46(2), 353–362. https://doi.org/10.2753/JEI0021-3624460210 Mouna, A., & Anis, J. (2017). Stock market, interest rate and exchange rate risk effects on non financial stock returns during the financial crisis. Journal of the Knowledge Economy, 8(3), 898–915. https://doi.org/10.1007/s13132-015-0301-4 OEC. (2019). Iraq (IRQ) exports, imports, and trade partners. Retrieved February 2, 2019, from https://oec.world/en/profile/country/irq/#Exports Pesaran, M. H., & Shin, Y. (1999). An autoregressive distributed lag modelling approach to cointegration analysis. In S. Storm (Ed.), Econometrics and Economic Theory in the 20th Century: the Ragnar Frisch Centennial Symposium (pp. 1–31). Cambridge: Cambridge University Press. https://doi.org/10.1017/CCOL521633230 Ramli, I. M., Nisa, Z., Khan, H. H. A., & Ramli, S. I. (2011). The impact of foreign direct investment and exchange rate on. Economics and Finance Review, 1(10), 49–54. Retrieved from http://www.businessjournalz.org/efr Rashid, A., & Saedan, M. B. (2014). Financial crisis and exchange rates in emerging economies: An empirical analysis using PPP-UIP-Framework. Business and Economic Horizons, 9(4), 86–96. https://doi.org/10.15208/beh.2013.24 Reddy, D. V. L. (2012). Impact of inflation and GDP on stock market returns in India. International Journal of Advanced Research in Management and Social Sciences, 1(6), 120–136. Retrieved from http://www.garph.co.uk/IJARMSS/Dec2012/9.pdf Rose, A. K., & Spiegel, M. M. (2012). Cross-country causes and consequences of the 2008 crisis: Early warning. Japan and the World Economy, 24(1), 1–16. https://doi.org/10.1016/j.japwor.2011.11.001 Seyed, K. T., & Mehdi, Y. (2014). Financial crisis, oil shock and trade in Asia. Journal of Economic Studies, 41(4), 601–614. https://doi.org/10.1108/JES-04-2011-0053 Shula, K. (2017). The impact of GDP, inflation, interest and exchange rates GDP on the stock market in Zambia (Working Paper No. 2). Lusaka. https://doi.org/10.13140/RG.2.2.11457.56160 Victor, O. N., & Kuwornu, J. K. M. (2011). Analyzing the effect of macroeconomic variables on stock market returns: Evidence from Ghana. Journal of Economics and International Finance, 3(11), 605–615. Retrieved from https://academicjournals.org/journal/JEIF/article-full-text-pdf/D41BE5F5772 World Bank. (2019). World Bank Open Data. Retrieved February 5, 2019, from https://data.worldbank.org/ Yurdakul, F. (2014). Factors that trigger financial crises: The case of Turkey. Procedia - Social and Behavioral Sciences, 109, 896–901. https://doi.org/10.1016/j.sbspro.2013.12.561
  36. Aghighi, Z., Tilehnouei, M. H., & Isfahani, S. T. (2016). The effects of inflation rate and foreign exchange rate changes due to the global financial crisis on the financial performance of banks listed on the tehran stock exchange. Journal of Advanced Research in Accounting and Auditing, 1(4), 1–5. Retrieved from https://www.sid.ir/en/journal/ViewPaper.aspx?id=597779
  37. Ari, A., & Cergibozan, R. (2018). Currency crises in Turkey: An empirical assessment. Research in International Business and Finance, 46(C), 281–293. https://doi.org/10.1016/j.ribaf.2018.04.001
  38. Berkmen, S. P., Gelos, G., Rennhack, R., & Walsh, J. P. (2012). The global financial crisis: Explaining cross-country differences in the output impact. Journal of International Money and Finance, 31, 42–59. https://doi.org/10.1016/j.jimonfin.2011.11.002
  39. Catalbas, N. (2016). The relationship among nominal exchange rate, import and export in Turkey for the period 1988:1 to 2015:3. International Research Journal of Applied Finance, VII(4), 11–25. https://doi.org/10.0704/article-1
  40. Cecchetti, S., Kohler, M., & Upper, C. (2009). Financial crises and economic activity (NBER Working Paper Series No. 15379). Cambridge. https://doi.org/10.3386/w15379
  41. Farzanegan, M. R., & Markwardt, G. (2009). The effects of oil price shocks on the Iranian economy. Energy Economics, 31(1), 134–151. https://doi.org/10.1016/j.eneco.2008.09.003.
  42. Gilchrist, S., Schoenle, R., Sim, J., & Zakrajšek, E. (2017). Inflation dynamics during the financial crisis. American Economic Review, 107(3), 785–823. https://doi.org/10.1257/aer.20150248
  43. Goldstein, M., & Xie, D. (2009). The impact of the financial crisis on emerging Asia (Peterson Institute for International Economics Working Paper No. 09–11). https://doi.org/10.2139/ssrn.1499875
  44. Griffith-Jones, S., & Ocampo, J. A. (2009). The financial crisis and its impact on developing countries (Working Papers No. 53). International Policy Centre for Inclusive Growth. Retrieved from https://ipcig.org/pub/IPCWorkingPaper53.pdf
  45. Hadinejad, M., Mohammad, T., & Shearkhani, S. (2010). 'Examine the sanctions’ efficiency on Iran’s non-oil trade (Gravity Model). New York: Social Science Electronic Publishing, Inc. https://doi.org/10.2139/ssrn.1661723
  46. Kamin, S. B. (1999). The current international financial crisis: How much is new? (Board of Governors of the Federal Reserve System International Finance Working Paper No. 636). https://doi.org/10.2139/ssrn.171714
  47. Katzman, K. (2018). Iran sanctions. Retrieved from https://crsreports.congress.gov/product/pdf/RS/RS20871
  48. Klapper, L., & Love, I. (2011). The impact of the financial crisis on new firm registration. Economics Letters, 113(1), 1–4. https://doi.org/10.1016/j.econlet.2011.05.048
  49. Lee, M. (2005). Asian financial crisis and exchange rate pass-through in Korea. Review of Applied Economics, 01(1), 143484. https://doi.org/10.22004/ag.econ.143484
  50. Li, L., Willett, T. D., & Zhang, N. (2012). The effects of the global financial crisis on China’s financial market and macroeconomy. Economics Research International, 2012, 1–6. https://doi.org/10.1155/2012/961694
  51. Liang, Y. (2012). Global imbalances and financial crisis: Financial globalization as a common cause. Journal of Economic Issues, 46(2), 353–362. https://doi.org/10.2753/JEI0021-3624460210
  52. Mouna, A., & Anis, J. (2017). Stock market, interest rate and exchange rate risk effects on non financial stock returns during the financial crisis. Journal of the Knowledge Economy, 8(3), 898–915. https://doi.org/10.1007/s13132-015-0301-4
  53. OEC. (2019). Iraq (IRQ) exports, imports, and trade partners. Retrieved February 2, 2019, from https://oec.world/en/profile/country/irq/#Exports
  54. Pesaran, M. H., & Shin, Y. (1999). An autoregressive distributed lag modelling approach to cointegration analysis. In S. Storm (Ed.), Econometrics and Economic Theory in the 20th Century: the Ragnar Frisch Centennial Symposium (pp. 1–31). Cambridge: Cambridge University Press. https://doi.org/10.1017/CCOL521633230
  55. Ramli, I. M., Nisa, Z., Khan, H. H. A., & Ramli, S. I. (2011). The impact of foreign direct investment and exchange rate on. Economics and Finance Review, 1(10), 49–54. Retrieved from http://www.businessjournalz.org/efr
  56. Rashid, A., & Saedan, M. B. (2014). Financial crisis and exchange rates in emerging economies: An empirical analysis using PPP-UIP-Framework. Business and Economic Horizons, 9(4), 86–96. https://doi.org/10.15208/beh.2013.24
  57. Reddy, D. V. L. (2012). Impact of inflation and GDP on stock market returns in India. International Journal of Advanced Research in Management and Social Sciences, 1(6), 120–136. Retrieved from http://www.garph.co.uk/IJARMSS/Dec2012/9.pdf
  58. Rose, A. K., & Spiegel, M. M. (2012). Cross-country causes and consequences of the 2008 crisis: Early warning. Japan and the World Economy, 24(1), 1–16. https://doi.org/10.1016/j.japwor.2011.11.001
  59. Seyed, K. T., & Mehdi, Y. (2014). Financial crisis, oil shock and trade in Asia. Journal of Economic Studies, 41(4), 601–614. https://doi.org/10.1108/JES-04-2011-0053
  60. Shula, K. (2017). The impact of GDP, inflation, interest and exchange rates GDP on the stock market in Zambia (Working Paper No. 2). Lusaka. https://doi.org/10.13140/RG.2.2.11457.56160
  61. Victor, O. N., & Kuwornu, J. K. M. (2011). Analyzing the effect of macroeconomic variables on stock market returns: Evidence from Ghana. Journal of Economics and International Finance, 3(11), 605–615. Retrieved from https://academicjournals.org/journal/JEIF/article-full-text-pdf/D41BE5F5772
  62. World Bank. (2019). World Bank Open Data. Retrieved February 5, 2019, from https://data.worldbank.org/
  63. Yurdakul, F. (2014). Factors that trigger financial crises: The case of Turkey. Procedia - Social and Behavioral Sciences, 109, 896–901. https://doi.org/10.1016/j.sbspro.2013.12.561
No Related Submission Found