TY - JOUR ID - 82469 TI - Dynamic Stochastic General Equilibrium Models in Iran: Deterministic or Stochastic Steady State? JO - Journal of Economic Research (Tahghighat- E- Eghtesadi) JA - JTE LA - en SN - 0039-8969 AU - Tavakolian, Hossein AD - Associate Professor, Faculty of Economics, Allameh Tabatabai University Y1 - 2021 PY - 2021 VL - 55 IS - 4 SP - 781 EP - 812 KW - Stochastic Steady State KW - Uncertainty KW - DSGE Models DO - 10.22059/jte.2021.317990.1008424 N2 - Since DSGE models do not have a closed-form solution, the model should be approximated around the steady state. The question that arises is whether this approximation should be around a deterministic steady state or a stochastic one? This study, usinng a modified new Keynesian model for Iran, considers oil price and production uncertainties. The results indicate that stochastic steady state and higher Taylor approximation can better explain the Iran's economy. Also, the results show that the level of consumption, private investment and GDP in the stochastic steady state is less than the deterministic steady state, while the government consumption and investment in the stochastic state are higher than the deterministic steady state. The impulse response function also show that the response of economic variables to different shocks in the stochastic steady state is less than that of deterministic steady state. JEL Classification: E32, E37 UR - https://jte.ut.ac.ir/article_82469.html L1 - https://jte.ut.ac.ir/article_82469_8f5b21cead793c1b1a5dc77522f32bfc.pdf ER -