Abstract

Output and inflation are two important indicators used to measure economic performance.  This study aims to investigate the effects of oil revenue shocks on output and inflation. To this end, we design an open dynamic stochastic general equilibrium (DSGE) model for the Iranian economy. We proceed to estimate impulse response functions of the Iranian economy to oil revenues shocks after linearization and calibration of model coefficients. Comparing estimated values of variables with the actual data of the economy indicate the relative success of the model in predicting changes in output and inflation. The results indicate that positive shocks of oil revenues increase output and inflation in the Iranian economy.

JEL Classification: C63، E63، Q43، E32