Document Type : ORIGINAL ARTICLE
Authors
1 Associate Professor of Economics and faculty member at Ferdowsi University of Mashhad, Mashhad, Iran
2 PhD student in Economics, Ferdowsi University of Mashhad
Abstract
Oil is considered to be one of the most important sources of national wealth in the world, and recently, its price has fluctuated a lot, putting dependent oil-exporting countries at risk of economic instability. Therefore, the aim of this study is to compare the potential asymmetric effects of crude oil price fluctuations on real GDP growth in two neighboring Middle Eastern countries (Iran and Iraq). In this study, deviation from the average is considered as crude oil price fluctuations, and to estimate the long-term and short-term asymmetric effects of crude oil price fluctuations on the economic growth of two oil-exporting countries (Iran and Iraq) with two models, one and two, the approach of the autoregressive model with non-linear distribution breaks (NARDL) and the annual data of 1990-2022 were used. Asymmetric analysis provides significant results regarding the difference in economic growth responses to positive and negative crude oil price shocks. In the case of Iran, the response of real GDP to a positive oil shock is larger than to a negative oil shock in the long run. The results showed that although the increase in the price of oil in the short term increases the economic growth of Iran, the increase in the price of oil in the long term reduces the real growth of Iran. In addition, the negative shock of oil in the short and long term will reduce Iran's economic growth.
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