Analyzing of Oil Revenues Shocks Asymmetric Effects on Misery index in Iran Using Vector Error Correction Model

Since the major part of oil revenues are control by government and it forms government’s expenditures; therefore, recognition of oil revenues growth shocks and their impacts intensity on macroeconomic variables such as inflation and unemployment is very important for economic policymakers. This study examines the asymmetric effects of oil revenues shocks on misery index in Iran’s economy by using vector error correction method. For this purpose, we use annual macroeconomic data during 1971-2014 periods. The result shows that both positive and negative shocks have a significant and negative effect on misery index and also long-term trend in oil revenues have a positive and significant relationship with misery index. On the other hand, population growth rate, government expenditure and trade openness index as well as influencing variables on misery index in the model were brought that have a positive and significant relationship with misery index. Also according to the Wald test results, the hypothesis of symmetric effects of positive and negative shocks of oil revenues is rejected.