Study of the Status and Role of Agriculture in Iran Business Cycles

The purpose of this paper is to extract the components of long-term business cycle trend and irregular impulses of real GDP، and also considering the status of agriculture in Iran business cycle. Real GDP is segregated by using Hodrick–Prescott filter and cyclical feature of key variables influencing the business cycle will be analyzed and calculated. Then، by the use of VAR model and response function، the measure of business cycles shock is considered. The results of the business cycle represent that Iran economy has experienced five complete business rounds during 1971-1980. The results show agriculture has a positive and statistically significant impact on GDP gap in long-term. Also، the results of the cross-correlation coefficient indicate that agriculture sector has been a backward variable toward GDP gap during the years 1971-1980 and 1981-1989، but it has been a leading variable during 1990-2008. This indicates that agriculture sector is considered as a driving factor in business cycle during the third period.