The Instability Impact of Oil Revenues on Value-added Agricultural Sector

Any variation in index of oil market such as price or instability, it is effective on total of countries of oil producer. Because of the extensive value of oil revenues and annual budget of government from oil import, the instability impact of oil revenues on different sectors of Iran’s economy is very important, especially agricultural sector. Therefore, the purpose of this article is the instability impact of oil revenues on value-added agricultural sector in period of 1971-2007 years by using of GARCH and ARDL approaches. The results show that in short-run and long-run, the impact of capital and labor variable on value-added agricultural sector is positive and significant. Also, instability variable of oil revenues has the negative effect and significant on value-added agricultural sector in short-run, while its effect is insignificant in long-run. Estimated error correction factor has expected sing and it shows that changes in value-added agricultural sector are corrected by 45 percent every year in long-run and it has high adjustment speed. The results of stability tests pointed out that the ARDL parameters are stable. Finally, the reinforcement of agricultural sector imports and the use of appropriate policies can reduce the intensity impact of instability of oil revenues.