The effects of oil price shocks on the Iranian economy

Mohammad Reza Farzanegan () and Gunther Markwardt

No 15/08, Dresden Discussion Paper Series in Economics from Technische Universität Dresden, Faculty of Business and Economics, Department of Economics

Abstract: The Iranian economy is highly vulnerable to oil price fluctuations. This paper analyzes the dynamic relationship between oil price shocks and major macroeconomic variables in Iran by applying a VAR approach. The study points out the asymmetric effects of oil price shocks; for instance, positive as well as negative oil price shocks significantly increase inflation. We find a strong positive relationship between positive oil price changes and industrial output growth. Unexpectedly, we can only identify a marginal impact of oil price fluctuations on real government expenditures. Furthermore, we observe the Dutch Disease syndrome through significant real effective exchange rate appreciation.

Keywords: macroeconomic uctuations; oil price shocks; developing economies; Iran; VAR modelling (search for similar items in EconPapers)
JEL-codes: E32 E37 Q32 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (9)

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Related works:
Journal Article: The effects of oil price shocks on the Iranian economy (2009)
Working Paper: The Effects of Oil Price Shocks on the Iranian Economy (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:tuddps:1508

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