In this paper, using an applied general equilibrium model, and not partial equilibrium model, we analyze Dutch disease in Iranian economy. The results of analysis show that due to the shock created by the increase of 50% in oil income the phenomena of Dutch disease occurred in Iranian economy 2005. As a result the tradable sectors especially the agriculture and industry have been weakened and the construction as a non-tradable sector has been strenthened. On the other hand, the increase in real exchange rate has followed as it is expected.
The increase of import and the decrease of non-oil export in all sectors are other results of our research. The increase of production costs which lead to an increase in domestic. Prices that in turn reduces the competability of such products with products produced by foreign countries. In other words this will intensify the weakening of tradable sectors.
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