The Role of Inflation Uncertainty onGas and Oil Consumption

Subject Areas : Financial Economics

Reza Ghaderi Moghadam ¹ , Bijan Baseri ^{2 *} , Nemat Falihi ³ , Gholamreza Abbasi ⁴

1 - Ph.D. student in Economics, Department of Economics, Islamic Azad University, Central Tehran Branch, ehran, Iran,
2 - Department of Economics, Islamic Azad University, Central Tehran Branch, Tehran, Iran, Corresponding Author
3 - Department of Economics, Islamic Azad University, Central Tehran Branch, Tehran, Iran
4 - Department of Economics, Islamic Azad University, Central Tehran Branch, Tehran, Iran

Received: 2022-03-29 Accepted : 2022-06-02 Published : 2022-08-23

Keywords: E31, C51, Oil, Gas, Keywords: Inflation Uncertainty, Economic Growth Uncertainty, Markov-Switching. JEL :C22,

Abstract :

The effects of inflation uncertainty and economic growth on oil and gas consumption in the Iranian economy are investigated. Using the family of GARCH models and annual data of inflation and economic growth during the period 1399-1360, the uncertainty behavior of inflation and economic growth has been estimated. The cofficient show that the uncertainty of inflation and economic growth has significant effects on level of gas and oil Consumption.In addition, thereaction functions based on the Markov-switching approach, determinds that the shock of inflation and economic growth uncertainty has a positive effects on gas and oil consumption at the beginning of the period and has a negative effect after 4 periods. In the medium term, it has a negative effect on oil and gas consumption, which can not be in line with the sustainability of oil and gas consumption, in the long run, such conditions has no effect on oil and gas consumption and tends to zero after 20 periods.