COMMODITY PRICE SHOCKS AND BUSINESS CYCLE

In recent years, commodity price shocks have been destabilizing the country's economy in different ways and they have extended to capital markets, foreign exchange, and Tehran Stock Exchange as well which have slowed economic growth. In this paper, we study factors affecting commodity price shocks and business cycle through SVAR in the period 1987-2014. Regression method and SVAR econometric model will be used for analysis. It can be concluded that the commodity price shocks of the prior period have a significant and positive impact on the commodity price shocks of the current period, moreover, factors such as increased ratio of export to import and the food and energy price index increase the probability of commodity price shock. In addition, by an increase in investment share and growth in labor productivity, the probability of commodity price shock in business cycle will decrease.