Factors affecting the production and supply of housing under the influence of exchange rates and sanction
Subject Areas :Mehrdad Mahmoudian zamaneh 1 * , Mohammad Jafari 2 , Morteza Ezzati 3
1 - Lorestan University
2 -
3 - پژوهشکده اقتصاد
Keywords: Keywords: Production, housing supply, currency, economic sanctions, inflation.,
Abstract :
Mehrdad Mahmoudian Zamaneh Mohammad Jafari Morteza Ezzati Abstract Aim and Introduction: The housing sector is one of the main pillars of the economy in many countries, including Iran. This sector plays an important role in economic development, employment and the welfare level of households. As a result of the sanctions, with restrictions on the foreign sector, the exchange rate changes, and as a result, the market of other assets, including the supply of housing, changes. The interrelationship between the housing market, exchange rate and economic sanctions has made us investigate the factors affecting the production and supply of housing under the influence of the exchange rate and sanction. The method used for data analysis is the seemingly unrelated regression (SUR). The findings of this research show that the price of housing, the number of issued building permits and inflation have a positive effect on the supply of housing, and the exchange rate, sanctions and the price of construction materials have a negative effect on the supply of housing. Imports and embargoes have increased the exchange rate and exports have decreased the exchange rate. On this basis, the embargo has both a direct effect and an indirect effect on the reduction of housing supply through the exchange rate. Methodology: Different methods can be used to estimate the model of the equations of this study, such as single equation methods or methods of solving simultaneous equations, whose estimates are different. The most common methods of solving simultaneous equations are the two-stage and three-stage least squares regression methods, as well as apparently unrelated regression, which is used when there is a relationship between the error part of the equations Or there is a simultaneous correlation. The method discussed in this research is the model of apparently unrelated regressions (SUR) or apparently unrelated regression equations (SURE), which was proposed in 1962 in econometrics. It is used in this review. Findings: The findings of this research show that housing price variables, the number of building permits issued, and inflation have a positive effect on the housing supply, while the exchange rate, sanctions, and the price of construction materials have a negative effect on the housing supply. Imports and embargoes have increased the exchange rate and exports have decreased the exchange rate. On this basis, the embargo has both a direct effect and an indirect effect through the exchange rate on the reduction of housing supply. Discussion and Conclusion: In the preliminary results, the estimate for the first equation of the average effect of labor wages as a part of the production cost was not significant. But in estimates, the effect of the price of construction materials is significant. This variable was removed from the model. It can be said that one of the reasons for the non-significance of the wage variable is its low relative growth compared to the growth of housing prices and the growth of construction materials. On the other hand, the share of wages in housing construction costs is much lower than the costs of materials and other costs. This causes the wage rate in Iran to be less effective in housing supply. It can also be said that an increase in the provincial GDP, housing prices and the number of building permits issued increases housing supply. The results of the second equation show that exports, imports, sanctions index, liquidity volume and provincial gross domestic product explain 99% of exchange rate changes. It is worth mentioning that the increase in exports and the sanctions index increases the exchange rate, but with the increase in imports, the exchange rate decreases, which shows the negative relationship between the exchange rate and imports. Since the exchange rate increases under the influence of the sanctions and the exchange rate has a negative effect on the housing supply, it can be said that the sanctions have a direct effect on the economic activities of supply and demand due to the disruption of security, certainty and economic stability. Housing has an effect on the supply of housing due to the change in the exchange rate.
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- Factors affecting the production and supply of housing under the influence of exchange rates and sanction.