The main Purpose of this paper is to discern the dynamic (in the Granger or temporal as well structural sense) among real and nominal variables in the cont ext of a (developing) oil exporting economy such as Iran. The result suggests that usefulness of the IS/LM model to interpret fluctuations in Iran is Limites. The dynamic causual chain implied by this study evidence that real output and import more often predominately lead (rather than lag) jmoney supply and other nominal endogenous variables provide support to what McCallum (1989) calls “ Weak version of equilibrium in real business cycles models, an issue that deserves more research.
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