Year 2020, Volume 5 , Issue 2, Pages 11 - 19 2020-12-30

Oil Income Shocks on Budget Deficit, Growth and Inflation for the Iranian Economy

Özgür Bayram SOYLU [1]


Oil revenues are of strategic significance for the Iranian economy. Iran, one of the largest oil producers, affects both the international markets and is affected by the developments in international markets. Although oil incomes have an important position for public sector balance and economic activity level, oil shocks have been crucial for the increasing budget deficits of the Iranian economy. The purpose of this paper is to investigate the dynamic economic growth, budget deficits, inflation and oil income shocks relation in Iran by SVAR Model using annual data for the period 1970-2012. The structural impulse-response functions and structural variance decomposition results made by SVAR technique showed that budget deficits are the most important variable explaining total oil incomes in Iranian economy.
Oil Income Shocks, Economic Growth, Inflation, Budget Deficit, SVAR
  • Akgün, A. (2006). Petrol Fiyatlarındaki Değişimlerin İMKB-100 Endeksi Üzerine Etkisi (Doctoral dissertation, Selçuk Üniversitesi Sosyal Bilimler Enstitüsü).
  • Aktaş, H., Kayalıdere, K., & Karataş Elçiçek, Y. (2018). Petrol, Dolar Kuru ve Hisse Senedi Piyasası Arasındaki Ortalama-Oynaklık Yayılım Etkisi: Bıst100 Uzerine Bir Uygulama. Muhasebe ve Vergi Uygulamalari Dergisi (MUVU)/Journal of Accounting & Taxation Studies (JATS).345-347
  • Basnet, H. C., & Upadhyaya, K. P. (2015). Impact of Oil Price Shocks on Output, Inflation and The Real Exchange Rate: Evidence From Selected ASEAN Countries. Applied Economics, 47(29), 3078-3091.
  • Bernanke, B.S. (1986), Alternative Explanations of Money-Income Correlation, Carnegie-Rochester Conference Series of Public Policy, 25, 49-100. Blanchard, O. J., & Gali, J. (2007). The Macroeconomic Effects of Oil Shocks: Why Are The 2000s So Different From The 1970s? (No. w13368). National bureau of economic research. 2-77.
  • Blanchard, O. J., & Quah, D. (1988). The dynamic effects of aggregate demand and supply disturbances (No. w2737). National Bureau of Economic Research.
  • Breitung, J., Brüggemann, R., & Lütkepohl, H. (2004). Structural vector autoregressive modeling and impulse responses. Applied time series econometrics. Boroumand, S., Mohammadi, T., Pajooyan, J., & Memarnejad, A. (2019). The Effect of Exchange Rate, Oil Prices and Global Inflation Shocks on Macroeconomic Variables for
  • The Iranian Economy in The Form of A DSGE Model. Iranian Economic Review, 23(4), 1057-1083.
  • Burbidge, J., & Harrison, A. (1984). Testing For The Effects of Oil-Price Rises Using Vector Autoregressions. International Economic Review, 459-484.
  • Camarero, M., & Tamarit, C. (2002). Oil Prices and Spanish Competitiveness: A Cointegrated Panel Analysis. Journal of Policy Modeling, 24(6), 591-605.
  • Cavalcanti, T., & Jalles, J. T. (2013). Macroeconomic Effects of Oil Price Shocks in Brazil And in The United States. Applied Energy, 104, 475-486.
  • Chatterjee, S., Bagchi, B., & Dandapat, D. R. (2016). Oil Price Shock and Effects on Stock Markets of Emerging Economies. MPRA Paper No. 75883. 1-41.
  • Cologni, A., & Manera, M. (2008). Oil Prices, Inflation and Interest Rates in A Structural Cointegrated VAR Model for The G-7 Countries. Energy Economics, 30(3), 856-888.
  • Dickey, D. A., & Fuller, W. A. (1979). Distribution of the estimators for autoregressive time series with a unit root. Journal of the American statistical association, 74(366a), 427-431.
  • Emami, K., & Adibpour, M. (2012). Oil income shocks and economic growth in Iran. Economic Modelling, 29(5), 1774-1779.
  • Farzanegan, M. R., & Markwardt, G. (2009). The effects of oil price shocks on the Iranian economy. Energy Economics, 31(1), 134-151.
  • Ghosh, S. (2009). Import Demand of Crude Oil and Economic Growth: Evidence From India. Energy Policy, 37(2), 699-702.
  • Guo, H., & Kliesen, K. L. (2005). Oil Price Volatility and US Macroeconomic Activity. Review-Federal Reserve Bank of Saint Louis, 87(6), 669-684.
  • Güneş, S., Gürel, S. P., & Cambazoğlu, B. (2013). Dış Ticaret Hadleri, Dünya Petrol Fiyatları Ve Döviz Kuru Ilişkisi, Yapısal Var Analizi: Türkiye Örneği. Uluslararası Yönetim İktisat ve İşletme Dergisi, 9(20), 1-17.
  • Hamilton, J. D. (1988, March). Are the Macroeconomic Effects of Oil-Price Changes Symmetric? A Comment. In Carnegie-Rochester Conference Series on Public Policy (Vol. 28, pp. 369-378). North-Holland.
  • Jbir, R., & Zouari-Ghorbel, S. (2009). Recent Oil Price Shock and Tunisian Economy. Energy Policy, 37(3), 1041-1051.
  • Jones, D. W., Leiby, P. N., & Paik, I. K. (2004). Oil Price Shocks and The Macroeconomy: What Has Been Learned Since 1996. The Energy Journal, 1-32.
  • Kapoor, A. (2011) The Economic Impact of Oil Price Shocks on Emerging Markets. CMC Senior Theses. Paper 139.
  • Kilicarslan, Z., & Dumrul, Y. (2017). Macroeconomıc Impacts of Oil Prıce Shocks: An Empirical Analysis Based On The Svar Models. Revista Economica, 69(5).
  • Kumar, S., & Managi, S. (2009). The Economics of Sustainable Development: The Case of India Springer Science & Business Media.
  • Lardic, S., & Mignon, V. (2006). The Impact of Oil Prices on Gdp in European Countries: An Empirical Investigation Based on Asymmetric Cointegration. Energy Policy, 34(18), 3910-3915.
  • Lütkepohl, H. (2005). New introduction to multiple time series analysis. Springer Science & Business Media.
  • Mehrara, M., & Mohaghegh, M. (2011). Macroeconomic Dynamics in The Oil Exporting Countries: A Panel VAR Study. International Journal of Business and Social Science, 2(21). 288-295
  • Mork, K. A. (1989). Oil And The Macroeconomy When Prices Go Up And Down: An Extension Of Hamilton's Results. Journal of Political Economy, 97(3), 740-744.
  • Nasir, M. A., Naidoo, L., Shahbaz, M., & Amoo, N. (2018). Implications of Oil Prices Shocks For The Major Emerging Economies: A Comparative Analysis Of BRICS. Energy Economics, 76, 76-88.
  • Pfaff, B. (2008). VAR, SVAR and SVEC Models: Implementation Within R Package Vars. Journal of Statistical Software, 27(4), 1-32.
  • Phillips, P. C., & Perron, P. (1988). Testing for a unit root in time series regression. Biometrika, 75(2), 335-346.
  • Phillips, P. C., & Perron, P. (1988). Testing for a unit root in time series regression. Biometrika, 75(2), 335-346.
  • Şengönül, A., Karadaş, H. A., & Koşaroğlu, Ş. M. (2018). Makroekonomik Değişkenler ve Finansal Değişkenlerin Uzun Dönem İlişkisi: SVAR Analizi. Journal of BRSA Banking & Financial Markets, 12(1).
  • Shapiro, M. D., & Watson, M. W. (1988). Sources of Business Cycle Fluctuations. NBER Macroeconomics annual, 3, 111-148.
  • Sims, C. A. (1980). Macroeconomics and reality. Econometrica, 48, 1-48.
  • Sims, C. A. (1986). Are Forecasting Models Usable for Policy Analysis? Quarterly Review, (Win), 2-16.
  • Sims, C. A., Stock, J. H., & Watson, M. W. (1990). Inference in linear time series models with some unit roots. Econometrica: Journal of the Econometric Society, 113-144.
  • Wang, Y., Wu, C., & Yang, L. (2013). Oil Price Shocks And Stock Market Activities: Evidence From Oil-İmporting And Oil-Exporting Countries. Journal of Comparative Economics, 41(4), 1220-1239.
Primary Language en
Subjects Economics
Journal Section Research Article
Authors

Orcid: 0000-0002-5030-5924
Author: Özgür Bayram SOYLU (Primary Author)
Institution: KOCAELI UNIVERSITY, FACULTY OF ECONOMICS AND ADMINISTRATIVE SCIENCES
Country: Turkey


Dates

Publication Date : December 30, 2020

APA Soylu, Ö . (2020). Oil Income Shocks on Budget Deficit, Growth and Inflation for the Iranian Economy . JOEEP: Journal of Emerging Economies and Policy , 5 (2) , 11-19 . Retrieved from https://dergipark.org.tr/en/pub/joeep/issue/55982/734675