Asymmetric Effects of Oil Income Growth on Inflation in Iran: VECM Approach

Abstract

Because of much dependence to oil revenues, Oil price fluctuations have much affect on Iranian economy. Since government possess a great deal of oil revenues and those financial government expenditure, then identifying manner and stringency of affecting shocks arise from oil revenue growth on inflation is very important. Subject of this paper is “Asymmetric effects of oil revenue growth on inflation in Iranian economy applying VECM method”. Our results indicate that both positive and negative shocks arise from oil revenue growth are inflationary.

Keywords

• inflation
• oil income growth
• asymmetric effects
• vecm method