Analysis of the Effect of Oil Revenues on Iran ̓s Economy: Dynamic Stochastic General Equilibrium Model

In this research¡ with the help of multisector DSGE model¡ the effect of oil windfall revenues on Iran᾽s economy under one of the money policy scenarios will be analyzed. Our definition of money policy scenarios consist of full absorption of oil income in reserves and fiscal policy (full spending of oil income) in relation to tradeable and nontradeable commodities. Aim the appropriate transmission channel of the oil income shock for the structure of Iran᾽s economy has been founded. Comparing the real data moments with the simulated amounts shows the relative success of the presented model for simulating Irans economy during the period between 1978 to 2013. Moreover¡ the results show a temporary increase in demand and also increase in the value of real exchange rate.