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The Effects of Oil Price Shocks on real GDP in Iran

Author

Listed:
  • Mohammad Taghi Khosravi Larijani

    (Department of Management, Islamic Azad University Jouybar branch, Jouybar, Iran)

  • Abbas Rezazadeh Karsalari

    (Department of Management, Islamic Azad University Tafresh branch, Tafresh, Iran)

  • Mehdi Aghaee

    (Department of Management, Islamic Azad University Tafresh branch, Tafresh, Iran)

Abstract

In this paper, the asymmetric effects of oil price shocks on GDP have been investigated by co-integration analysis in Iran economy during the period 1960-2010. We used Hodrick-Prescott filtering to separate positive shocks from negative shocks. The results showed that in long run the negative shocks have stronger effects on output than positive ones that can have damaging repercussions on economic growth. The findings have practical policy implications for decision makers in the area of macroeconomic planning. The use of stabilization and savings funds and diversification of the real sector seems crucial to minimize the harmful effects of oil booms and busts.

Suggested Citation

  • Mohammad Taghi Khosravi Larijani & Abbas Rezazadeh Karsalari & Mehdi Aghaee, 2013. "The Effects of Oil Price Shocks on real GDP in Iran," Hyperion Economic Journal, Faculty of Economic Sciences, Hyperion University of Bucharest, Romania, vol. 1(3), pages 18-29, September.
    • Handle: RePEc:hyp:journl:v:1:y:2013:i:3:p:18-29
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    Citations

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    Cited by:

    1. Monesa & Laila Taskeen Qazi, 2013. "The Effects of Oil Price Shocks on Economic Growth of Oil Exporting Countries: A Case of Six OPEC Economies," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 5(1), pages 65-87, April.
    2. Heidorn, Thomas & Van Huellen, Sophie & Ruehl, C. & Woebbeking, F., 2017. "The long- and short-run impact of oil price changes on major global economies," Frankfurt School - Working Paper Series 225, Frankfurt School of Finance and Management.

    More about this item

    Keywords

    lead; real GDP; Iran economy; asymmetric effects; oil price shocks; Johansen cointegration test;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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