The impact of China's economic growth shocks on Iran's macroeconomic variables: application of the GVAR model

Authors
Farzaneh Vafadar 1
Ghodratollah Emamverdi 2
Abolfazl Ghiasvand 2
Marjan Damankeshideh 2
1 Condidate of Economics, Islamic Azad University, Central Tehran Branch,Tehran, Iran
2 Assistant Professor of Economics, Department of Economics, Faculty of Economics and Accounting, Islamic Azad University, Central Tehran Branch,Tehran, Iran
Abstract
Due to the wide trade relationship between the countries of the world and the economic dependence of the countries on the global economy, the boom or record in the great economic powers of the world will quickly affect the economy of other countries.

In recent years, China has become one of the largest economic powers in the world and has been one of Iran's main trading partners for many years and is one of the countries that can have the greatest impact on Iran's economy.

On the other hand, due to the tightening of international sanctions on Iran in recent years, many measures have been taken to expand trade relations with other countries and attract foreign capital, among which the role of China as the main trading partner of Iran is prominent and it is necessary to reduce the shocks caused by To know the changes in China's economic growth and their effect on the macroeconomic indicators of the country.

Accordingly, the present study examines the effect of China's economic growth shocks on Iran's real GDP, inflation rate, and non-oil exports. In this regard, (GVAR) model and seasonal data from 1992 to 2022 for 34 major trading partner countries of Iran have been used.

The results of the study showed that the effect of a positive shock in China's real GDP on Iran's real GDP is positive in the short term, but in the long term, the said shock is negative and in the direction of its reduction. In relation to inflation, the effect of a positive shock to China's real production on Iran's inflation rate has always been positive and negative on Iran's non-oil exports.
Keywords
China's economic growth
Iran's economic growth
Inflation
Non-Oil Exports
Global vector autoregression model
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