Determinants of Business Cycles in the Iranian Economy (1970-2008)

Komail Tayebi, Seyed; Dashtban, Majid; Jabbari, Amir; Mojahedi Moakhar, Mohammad Mehdi

doi:10.22096/esp.2011.26185

Determinants of Business Cycles in the Iranian Economy (1970-2008)

Document Type : Original Article

Authors

Seyed Komail Tayebi ¹

Majid Dashtban ²

Amir Jabbari ³

Mohammad Mehdi Mojahedi Moakhar ³

¹ Professor of Economics, University of Isfahan

² Assistant Professor of Economics, Bojnourd University

³ PhD student in Economics, University of Isfahan

10.22096/esp.2011.26185

Abstract

Using an aggregate supply-demand specification and its relevant variance decomposition analysis, this paper explores the major determinants of business cycles in the Iranian economy over the period 1970-2008.
Empirical results indicate that GDP has played the major role in its own instability during the period. This reveals the fact that the main components of GDP such as investment, consumption, trade balance and government expenditures have caused substantially business cycles. Additionally, the Iran’s business cycle has been resulted by the OPEC oil price and its fluctuations through trade balance, terms of trade (TOT) and exchange rate.
Moreover, the empirical results arising from the computed cross correlation coefficient between GDP and the relevant determinants show a co-movement relationship between GDP, prices and real money balances. Terms of trade and exchange rate have had a lagging effect and a leading one on the country’s GDP, respectively.

Keywords

Business Cycles

Aggregate Supply-Demand Model

SVAR Model

Variance Analysis

منابع

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