The Effect of Oil Shocks on the Green Production in Iran

GDP growth rate as a measure of economic progress is estimates on the basis of national accounts . Since the national accounts are recorded regardless of natural resource depletion, by estimating depreciation in the oil, gas, coal and other parts of the environment, depletion of natural resources can be accounted for which will provide the access to green GNP index. Green GNP shows increased economic growth stability. Among all natural resources, oil is the most important source of revenue for oil exporting countries and fluctuations in its price is a major factor for economic crisis in both the oil-exporting and importing countries. The main purpose of the present paper is to examine the impact of oil price shocks on green GNP . For this study, the first oil price shock are calculated using hoodrick - Prescott Filter method and then the effects of oil price shocks on green manufacturing was estimated using self regressing pattern. Based on the estimation results in the short term, oil price shocks have a negative impact on the green production . This is due to the oil extraction, depletion of natural resource is increased and it leads to decreasing the green production , and it has negative impact on green production in the long-run because an increase in oil production will lead to real growth of other sectors so that this growth offsets the depreciation