The household is an important economic institution, which forms a major part of people's attitudes and beliefs and plays a key role in raising children and the workforce. The vulnerability and ability of this institutional unit to deal with risks are of important impacts on economic performance. On the other hand, developing countries usually face a lack of capital due to low domestic savings and limited access to capital markets. The entry of foreign capital through the receipt of official development aid leads to access to foreign markets with modern technologies and the acquisition of management skills, thus contributing to economic growth. International trade also leads to the provision of capital and machinery, which are necessary for economic development. Thus, the purpose of this article is to analyze the effect of the household risk preparation, official development aid and the trade openness on Iran's economic growth during 1997-2020.

In this article, firstly, following the World Development Report (2014) and using the variables of the sub-indices of access to financial resources, social support, human capital and the economic capacity of the government, the combined index of the household risk preparation is calculated by the method of Principal Components Analysis (PCA) in order to weight the selected variables. Then the following model is specified according to Foa (2014) and Zhao et al. (2021). The model is estimated using smooth transition regression (STR) method:  

In equation (1), Xt
  is a vector of independent variables (Household risk preparation, official development aid, trade openness, labor force, physical capital and labor productivity), σ'=(σ0,σ1,…,σz)' 
  is the vector of the linear part's coefficients and Ω'=(Ω0,Ω1,…,Ωz)'
   is the vector of the nonlinear part's coefficients. c is the threshold level, γ is the transition speed between regimes, st
  is the transition variable, T is the  transition function. In the STR model, the transition between different regimes is done by the logistic function (LSTR) or the exponential function (ESTR). The linearity of the model should be tested and the appropriate transition variable should be selected.