Agriculture and Economic Growth: The Case of Iran

Mohsen Mohammadi Khyareh; Ahmad Jafari Samimi
An autoregressive Distributed Lag (ARDL) cointegration framework during 1970-2009 is used to examine the short-run and long-run role of agricultural value added in economic growth of Iran. Results show that the empirical evidence strongly suggests that agriculture makes a significant contribution to economic growth in the long-run. The long-run and short-run elasticities of agricultural value added are estimated to be 0.27 and 0.39 respectively. A statistically significant error correction term implies that long-run causality exists such that past equilibrium errors play a significant role in determining current outcomes. The adjustment parameter is 0.78 which implies that around 0.78 of growth adjustment taking place in any year, in other words around 99% of the growth adjustment occurring after three periods. Also, performing multivariate Granger causality tests based on the ARDL-ECM estimates show that, agriculture cause real GDP per capita in the both short-run and long-run, but real GDP per capita cause agriculture only in the short-run.
Agriculture; Economic Growth; ARDL; Iran
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