Modelling Oil and Monetary Shocks in the Iranian Economy: The VECMX Approach

The goal of this paper is to analyze the effects of oil and money on operation of macro variables of Iranian economy in short and long-run. A macro model has been designed to show three long-run relationships that contains output, real money balance and purchasing power parity in a vector error correction model with exogenous variables. This model has been estimated based on seasonal data during 1367 to 1387. The results confirm three long-run relationships said in Iranian economy. The responses of macroeconomic variables to oil and monetary shocks analyzed based on estimated model and impulse response functions.