Description:
Investigating the impact of liquidity on industrial production is one of the challenging issues in economics. In this article, we investigate the difference in the structure of industrial production in industrialized countries and Iran as an undeveloped country by using the characteristic of liquidity quality. In this regard, the effect of liquidity in terms of its components, i.e., money and pseudo-money, on the industrial production index is investigated using the Markov-switching model and monthly in the period from April 2014 to March 2022 in Iran.The results obtained are in terms of the unfavorable quality of liquidity, so the examination of the share of money and quasi-money in liquidity shows the increasing growth of quasi-money compared to money, and on the other hand, despite the positive effect of money, a much more significant negative effect of quasi-money on GDP, especially industrial production, shows unfavorable quality liquidity on industrial production