The effects of oil price shocks on real GDP in Iran | Zendy

Rezazadehkarsalari Abbas | Zendy; Haghiri Fateme | Zendy; Behrooznia Alireza | Zendy

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The effects of oil price shocks on real GDP in Iran

Author(s) -

Rezazadehkarsalari Abbas,

Haghiri Fateme,

Behrooznia Alireza

Publication year - 2013

Publication title -

african journal of business management

Language(s) - English

Resource type - Journals

ISSN - 1993-8233

DOI - 10.5897/ajbm12.065

Subject(s) - economics , diversification (marketing strategy) , oil price , monetary economics , boom , real gross domestic product , oil boom , macroeconomics , environmental science , business , marketing , environmental engineering

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.

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