The Effects of Petroleum Price on Economic Growth and Government's Financial Variables in Iran

Petroleum price is a variable which affects the economies of all countries (either exporters or importers). This paper uses Iran’s economic data during 2006-1959 to study the petroleum price impact on Government’s financial variables and economic growth through cointegrated VAR method. An influential facet of petroleum price is uncertainty and its effect. This uncertainty is taken from GARCH (1,1) model. Unsymmetrical effects of petroleum price on the variables of the model are examined as well. According to the findings, the main hypothesis of the study about the effectiveness of the petroleum price on Iran’s economy through Government’s budget, is not rejected.