Investigating the Relation between Oil Revenues Fluctuations and Government Size on Social Capital in Iran

Document Type : Original Article

Authors

1 PhD Candidate in Economics, Faculty of Administrative Sciences and Economics, University of Isfahan

2 Professor of Economics, Faculty of Administrative and Economics Sciences, University of Isfahan

3 Department of Economics, Faculty of Administrative and Economics Sciences, University of Isfahan

Abstract

In this paper, the impact of government size, as an index showing economic and political freedom, and oil revenue fluctuations on social capital is analyzed. To do so, we had to define and measure an index for social capital, according to previous studies. Trust is the most common criteria, used in studies. In this research, following Fukuyama approach, we used invers method. Instead of evaluating or measuring social capital as a positive value, the amount of its non-existence is measured. So, we have measured lack of trust (social capital) by defining a compound index. The compound index is made by taking average of two variables: Number of judiciary case (including dishonored checks) and value of ratio of non-performing loans to total loans paid (to private sector), both normalized between zero and one. According to this index, trend of social capital during studying period (1362-1390) is decreasing. Estimating social capital function with government size and oil revenue fluctuations as explanatory variables using ARDL approach, shows that government size as the index for eco-political freedom, and oil revenue fluctuations, both have negative impact on social capital.

Keywords


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