The Effects of Decomposed Oil Price Shocks on the Iranian Macroeconomic and Fiscal Variables
In this study, I examine the effect of different supply and demand shocks in the oil market on the Iranian macroeconomic and fiscal variables. First, oil price shocks are decomposed into Iran’s oil production shocks, the world’s oil production shocks, the world’s general demand shocks, and the oil-market specific demand shocks using the methodology suggested by Kilian (2009) over the period of 1974m1-2019m6. In the next stage, I utilize the estimated oil shocks to examine the effect of each type of shocks on selected Iranian macroeconomic and fiscal variables for the period of 1990Q2-2018Q3. The results of this study show that different oil shocks affect Iranian macroeconomic and fiscal variables with different magnitudes and significance. Similar to the findings of Kilian (2009), the oil demand shocks have more significant impacts on macroeconomic and fiscal variables compared with the oil supply shocks. Moreover, although the government revenues are not sensitive to the oil shocks, the government expenditures generally show significant responses to these shocks. The directions of the responses of the government expenditures suggest that a sensible fiscal policy exists, aiming to adjust the speed of the booms and busts in the economy, depending on the effect of each shock on the GDP
Year of publication: |
[2022]
|
---|---|
Authors: | Tohidimehr, Hossein |
Publisher: |
[S.l.] : SSRN |
Subject: | Ölpreis | Oil price | Iran | Finanzpolitik | Fiscal policy | Wirkungsanalyse | Impact assessment | Öffentliche Ausgaben | Public expenditure |
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