The Effect of Different Scenarios of the Share of Oil Revenues in the National Development Fund on the Production and Employment: the Case of Iran

Many countries which their exports are mainly based on mineral resources are faced with the fluctuations in their foreign revenues. Based on this issue In Iran, in order to reduce the negative effects of oil shocks revenue on macroeconomic variables the National Development Fund was established as a tool to control such a fluctuations. In this study, using the Dynamic Stochastic General Equilibrium Model, three scenarios were developed to investigate the impact of the share of funds which will be allocated to the National Development Fund for controlling oil revenue fluctuations. In the first and second scenarios, according to the fifth and sixth development plans, the share of the fund was equal to 20% and 30%, respectively, and in the third scenario, the share of the fund was considered as floating share in models which have been applied. According to the research findings, the impulse function of oil revenues shocks in all three scenarios has increased the production and employment of the public sector and reduced the employment in the private sector. The results indicate that when oil shocks occur, the use of floating share of oil revenue for the National Development Fund in relative to the fixed share to allocate oil revenue sources to that fund, causes more fluctuations in production and employment variables in the public sector