Institutional Innovations for Controlling the Institutional Destruction of Oil Shocks in Iran

In the economic literature, institutional quality and the factors affecting its changes, have become one of the important issues in economic growth of countries.One of theis factors in oil exporting countries such as Iran is oil revenues and shocks. Although in existing studies the effect of oil shocks on the destruction of Iranchr(chr('39')39chr('39'))s institutional quality has been accepted, few studies have focused on policy-making in controlling institutional destruction of oil shocks. Hence, this study with a review of the literature, attempts to introduce Institutional innovation for control the institutional destruction of oil shocks in Iran. In this regard, the principles of macroeconomic stability, risk management, good governance and financial discipline have been considered. The results of the study indicate that applying specific financial rules, sufficient central bank independence Plus reforming the budget structure to reduce the direct dependence on oil revenues via reforming the tax system, expanding the debt market and productivity of government assets, reform the national development fund structure, establishing a operational budgeting system, reform of subsidized payment system and modify the structure of pension funds  are the most important institutional innovations for control the institutional destruction of oil shocks in Iran. The findings may imply important policy implications for authorities, so it is suggested that these institutional reforms be seriously pursued.