Business Cycle Features in the Iranian Economy

This paper studies the business cycle characteristics of the Iranian economy and the co-movements of macroeconomic variables with oil prices. As is common in most developing and emerging countries,volatility of business cycles in Iran is high. Except for monetary aggregates, co-movements of business cycles are similar to those of developed countries. The theoretical impacts of monetary policy cannot be supported since results show that they have small negative effects on real output. Findings suggest that supply shocks play prominent roles in the macroeconomic fluctuations of the Iranian economy. Moreover, nominal money and price level are procyclical with oil prices. And different price indexes are procyclical with oil prices.