Investigating the Effect of Institutional Quality Shock on Economic Performance and Environmental Quality

Document Type : Research Paper

Authors

1 PhD student, Department of Economics, Faculty of Economics and Management, Shiraz Branch, Islamic Azad University, Shiraz, Iran.

2 Department of Economics, Faculty of Economics and Management, Shiraz Branch, Islamic Azad University, Shiraz, Iran.

Abstract

Policy instruments for sustainable development are essential to strike a balance between the concept of economic development, environmental degradation, and social justice. Appropriate and high-quality environmental policies in an economy can be one of the key determinants for improving environmental quality. Therefore, high-quality institutions should be considered as a reference for providing appropriate laws. Given the importance of this issue, in this study, using a dynamic stochastic general equilibrium model and considering the product confiscation mechanism, the economic and environmental effects of institutional quality shocks in Iran during the period 2001.03.21-2022.09.23 were investigated. The results of the model estimation showed that improving institutional quality increases economic growth due to increased capital and labor productivity. Also, reducing corruption and rent-seeking activities leads to more serious pursuit of environmental protection programs, which leads to improved environmental quality. According to the results of the model estimation, it is recommended that governments and policymakers, by adopting anti-corruption and bribery measures, create conditions for optimal resource allocation and reduction of rent-seeking activities, so that the goal of achieving sustainable development can be achieved.

Keywords

Journal of Environmental and Natural Resource Economics
Volume 5, Issue 11
November 2025

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History

  • Receive Date: 16 June 2025
  • Revise Date: 07 July 2025
  • Accept Date: 16 July 2025

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