Estimating of the Equilibrium Situation of Iran’s Economy within RBC Models

Nader Mehregan (), Saeed Isazadeh (), Ezatollah Abbasian () and Ebrahim Faraji ()
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Nader Mehregan: Professor of Economics, Bu-Ali Sina University
Saeed Isazadeh: Associate Professor of Economics, Bu-Ali Sina University
Ezatollah Abbasian: Associate Professor of Economics, Bu-Ali Sina University
Ebrahim Faraji: Ph.D. Candidate in Economics, Bu-Ali Sina University

Quarterly Journal of Applied Theories of Economics, 2016, vol. 3, issue 2, 1-22

Abstract: It seems to be essential, define and compute an equilibrium for the Iran’s economy in order to derive explicit predictions about the mechanism of Real Business Cycles in Iran. In this article, it is attempted to estimate some important parameters and functions of Real Business Cycle models in the equilibrium situation of Iran’s economy based on the model introduced by McCallum (1989). Therefore, first the key function of McCallum is conducted using the annual time series in the period of 1959-2012, then production, household utility and Technology functions are obtained. According to the results presented in this article, elasticity of production to capital asset is 0.47 and the persistency of economy’s technology shocks is 0.79. Moreover, the persistency of technology shocks in both agriculture and oil sector are higher than all other existing sectors. Furthermore, the time preference rate and discount factor are 0.11 and 0.90 respectively. The elasticity of consumption to Leisure in Iran is 1.85.

Keywords: Real business cycle; Production function; Household utility function; Technology shocks. (search for similar items in EconPapers)
JEL-codes: E20 E32 O30 (search for similar items in EconPapers)
Date: 2016
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