Business Cycle

In this paper, we empirically investigate the relationship between oil price changes and output in a group of oil exporting countries. The dynamics of business cycles in Libya, Saudi Arabia, Nigeria, Kuwait, Venezuela and Qatar are modeled by alternative regime switching models. We show that the extension of uni-variate Markov Switching model in order to include oil revenue improves dating business cycles in these economies. For all countries, the optimal specification suggested by the data is to consider three cycles or regimes, namely, high growth, mild growth, and recession. These three regimes can be associated to high positive oil shock, mild positive oil shock and negative oil price shock. An interesting finding of the paper is that there is a variety of relationships between oil price shocks and business cycles. Thus, in order to see the effects of an oil price shock one should take into consideration the economic regime when the oil price shock hits the economy. Therefore, it is not possible to talk about a general relationship between oil price shocks and macroeconomic variables for all the main oil exporting countries. JEL Classification: E31, E32, E52, Q41

In economic theory, various determinants are considered to explore their effects on trade patterns. Accordingly, business cycles indicate turbulences in economic activities. Business cycles and their fluctuations cause a change in demand for goods and services from the other country then it can affect trade flows. In this study, by using a gravity model, we study the effects of business cycles on bilateral trade flows within Eurozone countries. In this regard, the challenge is that the countries in the region may be faced whit changes in their trade relation in directions whether parametric or non-parametric manners. To be evident, we have used we have used data from six Eurozone countries, namely Germany, France, Italy, Spain, Portugal and Greece for the period of 1995-2013, and then estimate the model with a semi-parametric panel data approach. The empirical results have shown that business cycles explain trade relations non-parametrically in the region. The results imply a transparent unique exchange policy toward their mutual trade flows to avoid outliers in their economic relations. JEL Classification: C14, F10, E32.  

Controlling the business cycle and minimizing the inflation gap are considered as two major goals for monetary policy. Hence, the policymaker will be able to make more decisive decisions with an awareness of the dynamic relationship and causal relationship between these two variables. Accordingly, the present study uses a discrete and continuous wavelet transform to provide a new understanding of the relationship between these two variables in Iran's economy during the years 1990:2 – 2017:1. According to the results of the research, in the short-run (less than one year), the causal relationship has been bidirectional and procyclical. In the medium run (1 to 4 years), the causal relationship is countercyclical and from the inflation gap to the business cycle. In the long run (4 to 8 years), the business cycle is leading, and the two variables are in phase. Besides, the relationship between variables is highly unstable over time and depends on different scales. Therefore, inflation in Iran's economy is not merely a monetary phenomenon, and in the medium-term is affected by changes in the real sector. According to the results of the research, for the output and the inflation to be stable, it is recommended that the policymaker take both goals simultaneously.

This study was conducted to determine the effect of the asymmetric oil price shock, tax revenues, resource curse, stock market, and business cycles of Iran by using the structural vector auto regression model (SVAR) for the 1984-2018 period. According to results of the estimated SVAR model, an impulse imposed by the duration of sanctions on oil exports led to an 89% increase in production gap, and impulses caused by liquidity and stock price led to 86% and 53% rises in production gap, respectively. Variation in oil and foreign exchange earnings results in different and even conflicting changes in foreign and domestic sectors of the economy, which subsequently affect the economic performance positively or negatively. Regarding economic structure and principles, a constant increased exchange rate leads to economic growth while a cross-sectional increment in exchange rate does not lead to any economic prosperity. Increased exchange rate and decreased domestic money weakness will increase foreign debt, which in turn causes liquidity shortage. Overall, the liquidity shortage of economic firms has a negative impact on the return of stock and business cycles. Hence, policymakers must pay considerable attention to macroeconomic indicators.

A healthy and profitable banking system can better withstand economic shocks and play a more effective role in the sustainability and stability of the financial system. The creation of this type of banking system is possible when all financial institutions operating in a country's money market are sound institutions and have appropriate financial indicators. The experience of the recent financial crisis and the devastating effects of transition the crisis from the monetary sector to the real sector of the economy have shown that it is necessary to pay more attention to the issue of banking health. Therefore, the main purpose of this article was to investigate the factors affecting the asset quality ratio of the country's banking system, as one of the main indicators of banking system soundness with the emphasis on business cycles, macroeconomic variables and banking variables in the time period between the years 2001 to 2018. The statistical population in the study was 29 banks operating in Iran. In this research, the dynamic panel model, system Generalized Method of Moments (GMM) has been used to achieve the desired goals. The results show that business cycles have a significant negative correlation with the quality of assets in the banking system. Also, all macroeconomic and banking variables have a significant correlation with the ratio of asset quality in the banking system.