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Investigating the Effect of Iran's Oil Revenues Shock on Macroeconomic Variables in the DSGE Model

Author

Listed:
  • Soleymanzad, Iraj

    (PhD. Candidate in Economics, Urmia University)

  • Faaljou, Hamid Reza

    (Assistant Professor of Economics, Urmia University)

  • Heidari, Hassan

    (Professor of Economics, Urmia University)

Abstract

The purpose of this study was to investigate the effect of Iran's oil revenues on macroeconomic variables in the form of DSGE model during the period of 1995-2015 in the context of open economy based on the real business cycle pattern, in line with the conditions of the Iranian economy including households, enterprises, government and The monetary authority is the oil sector with an emphasis on the National Development Fund. The results of simulation of the model variables indicate that, due to the positive impetus of oil revenues, production, consumption, investment, government spending under both scenarios increases, but the increase in the direct tax distribution scenario is higher than the base scenario. Also, the greater the share of government-owned oil revenues (50 and 75percent) in households from the current budget, the increase will also be higher in the resources of the National Development Fund. Consequently, the contribution of the Facility to the Private Sector (F) increases. According to the modeling of this study, the increased private sector investment (I_t^pa) also increases, as a result of non-oil production in the country. Therefore, based on the results obtained, the direct tax-deductible distribution policy is recommended as a supplement to the National Development Fund

Suggested Citation

  • Soleymanzad, Iraj & Faaljou, Hamid Reza & Heidari, Hassan, 2019. "Investigating the Effect of Iran's Oil Revenues Shock on Macroeconomic Variables in the DSGE Model," Quarterly Journal of Applied Theories of Economics, Faculty of Economics, Management and Business, University of Tabriz, vol. 6(1), pages 149-182, May.
    • Handle: RePEc:ris:qjatoe:0142
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    More about this item

    Keywords

    Shock; Financial policy; Oil sector; Investment; DSGE model;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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