Estimating the Efficient Shocks' Share in Iran's Economic Growth Fluctuations (Dynamic Stochastic General Equilibrium Approach)

In economic, the degree of intervention of policymakers in creation of economic stability and the response to economic fluctuations is one of the most important problems. The higher the share of efficient shocks in economic fluctuation, the lower the degree of policy response. This study evaluates the contribution of efficient shocks in creating of economic fluctuations and also estimates potential and efficient economic growth in Iran by using the seasonal data over 1988-2015 and the Dynamic Stochastic General equilibrium Approach. The results of DSGE estimation show that the high share of economic fluctuations in Iran is inefficient and monetary shocks accounted over 70 percent of economic fluctuation. Also, the estimation of potential and effective growth over 1988-2015 implies that efficient growth is smoother than potential and real growth.  The sustainability of the effect of technology shock on production indicates the importance of paying attention to the growth of technology and productivity in the Iranian economy. Therefore, focusing on long-term growth has more benefits than focusing on business cycles.