Studying the Effect of Financial Friction and Development Shocks on Knowledge Base Index of Economic Sectors in Iran

اقتصاد پولی مالی

Article 2, Volume 31, Issue 27, January 2024

Document Type: Original Article

DOI: 10.22067/mfe.2023.81568.1292

Authors

Sareh Amirmojahedi¹; Ali Raeispour Rajabali^{* 2}; seied abdolmajed jalaee esfandabadi³; reza zeinalzadeh²

¹Phd Student in Economics,Faculty of Management and Economics,Islamic Azad University ,Kerman,Iran.

²Assistant Professor of Economics Department, faculty of Literature and Humanities, Kerman azad university, Kerman, iran.

³Prof. in Economic, Faculty of Management and Economic, Shahid Bahonar University, Kerman, Iran.

Abstract

Considering that in the knowledge economy , production, distribution and application of knowledge and information is the main factor of development, produce of wealth and employment in all economic activities, therefore, it is important to examine the financial friction and financial development on the indicators of the knowledge economy of economic sectors, Therefore In this research the effect of shocks due to financial friction (increase in legal reserve rate) and financial development (reduce in bank loans interest rate) on knowledge base index (R&D expenditure) of each economic sector (agriculture, industry and services) was studied using Recursive Dynamic Computable General Equilibrium (RDCGE) model. For this purpose the required date was gathered from social accounting matrix of Islamic Parliament of Iran related to year 2011 and input-output table of Central Bank of Iran related to year 2016. Results indicated that shocks of financial friction have significant inverse effect and shocks of financial development have significant positive effect on knowledge base index (R&D expenditure) of agriculture, industry and services sectors. Because with increase in financial friction or development, the ability of banks for allocating bank loans to economic firms will reduce and consequently their knowledge base index (R&D expenditure) will reduce. In addition between studied economic sectors, the financial friction and development shocks have the most effect on knowledge base index (R&D expenditure) of industry, agriculture and services sectors, respectively.

Keywords

Financial friction; financial development; knowledge base index; economic sectors; RDCGE model

References