Analysis of the Dynamic Causality Relationship between the Financial and Economic Stability Index and  the Economic Growth of the Road Transport Sector

Badar Ardebili, Parisa; Emamverdi, Ghodratollah; Ghiasvand, Abolfazl; Seifipour, Roya

doi:10.22034/tri.2024.446141.3232

Analysis of the Dynamic Causality Relationship between the Financial and Economic Stability Index and the Economic Growth of the Road Transport Sector

Document Type : Original Article

Authors

Parisa Badar Ardebili ¹

Ghodratollah Emamverdi ¹

Abolfazl Ghiasvand ¹

Roya Seifipour ²

¹ Department of Economics, Central Tehran Branch, Islamic Azad University, Tehran, Iran.

² Department of Economics, Central Tehran Branch, Islamic Azad University Tehran, Iran.

10.22034/tri.2024.446141.3232

Abstract

Financial stability is the cornerstone of modern economies and shows the proper functioning of the financial system and is a prerequisite for economic growth and strengthening the economy against shocks. In the path of economic growth and development, financial stability and its effects play an important role in the economy. On the other hand, road transportation is one of the important sectors of the country's economy and has a great impact on the country's economic growth. So, considering the importance and role of financial and economic stability in increasing the country's economic growth, as well as the importance of road transportation in the country's economy, in this study, the analysis of short-term and long-term causality relationships between the financial and economic stability index and the economic growth of the investigated road transport sector is included. For this purpose, first, the combined financial and economic stability indices were calculated, and then the short-term and long-term causal relationships between the financial and economic stability index and the economic growth of the road transport sector were analyzed. The results indicate a long-term and short-term relationship between the growth of the combined indicators of financial and economic stability and the value-added growth of the road transport sector, the growth of the amount of goods carried and the growth of the amount of passengers carried in the road transport sector. The effect of combined indicators of financial and economic stability on the added value of the road transport sector, the growth of goods transportation and the growth of passenger transportation has been positive. There is a one-way causal relationship from the combined indicators of financial and economic stability to the added value of the road transport sector, the increase in the amount of goods transported and the growth in the amount of passenger transportation.

Keywords

Financial and Economic Stability Index

Dynamic causality

Vector Error Correction Model

Road Transport

Subjects

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