The Journal of Economic Studies and Policies

The Journal of Economic Studies and Policies

Investigating the effect of inflation on economic growth and non-life insurance in MENA countries

Document Type : Original Article

Authors
1 Associate Professor, Faculty of Administrative Sciences and Economics, Ferdowsi University of Mashhad, Mashhad, Iran.
2 PhD in Economic Development, Faculty of Administrative Sciences and Economics, Ferdowsi University of Mashhad, Mashhad, Iran.
3 Professor, Faculty of Administrative Sciences and Economics, Ferdowsi University of Mashhad, Mashhad, Iran.
4 Assistant Professor, Faculty of Administrative Sciences and Economics, Ferdowsi University of Mashhad, Mashhad, Iran.
5 PhD student in Economic Development, Faculty of Administrative Sciences and Economics, Ferdowsi University of Mashhad, Mashhad, Iran.
Abstract
This study examines the impact of inflation on economic growth and the non-life insurance sector in MENA countries over the period 1994–2017. Given the potential bidirectional relationship between non-life insurance development and economic growth, we first employ the Demetrescu and Herlin (DH) causality test to determine the direction of causality. The results confirm a two-way causal relationship between the two variables. To account for this endogeneity, a system of simultaneous equations is estimated using both instrumental variables (IV) and the generalized method of moments (GMM). To address issues of heterogeneity and heteroskedasticity, the model is estimated under three alternative specifications: a baseline model, a heterogeneity-robust model, and a clustered robust model accounting for both heterogeneity and heteroskedasticity. The findings consistently indicate a significant and negative relationship between inflation and both economic growth and non-life insurance penetration. These results highlight the detrimental role of inflationary pressures on macroeconomic performance and insurance market development in the region.
Keywords
Subjects

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Articles in Press, Accepted Manuscript
Available Online from 20 April 2026