Studying Recessions and Booms in Iran Economy by Using Markov Switching Model

Subject Areas : Labor and Demographic Economics

Morteza Salehi Sarbijan ¹ ( مربی اقتصاد دانشگاه زابل )
gholam ali Reisi ² ( استادیار اقتصاد دانشگاه صنعتی اصفهان )
Nader Shetab Booshehri ³ ( استادیار اقتصاد دانشگاه صنعتی اصفهان )

Received: 2015-04-12 Accepted : 2015-04-12 Published : 2013-04-01

Keywords: C32, E32, C51,

Abstract :

In this paper, by using the nonlinear model of Hamilton Markov switching, the possible features of circular pattern are considered in Iran by a seasonally adjusted real GDP during 1988-2008. The results represent that business cycles extracted from Markov switching method are more appropriate than the linear model and the growth rate of GDP divided into three regimes by the average of negative, mildly positive and high positive growth as 3.92, 4.43 and 9.53 respectively. Iran economy experienced, during the above period, 7 seasons of recession, 10 seasons of mild growth and 58 seasons of high growth. Furthermore, the probability of stability in recession, moderate, and high growth are estimated 0.3, 0.92 and 0.5 percent respectively.

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