A Differential Equation Model for Studying Business Cycle: An Empirical Case Study of Iran's Economy (1975-2005)

This study is an attempt to develop a model of the simultaneous structure of the aggregate dynamic supply and demand to be used for estimation of parameters from data related to Iran’s Economy. The method for developing the model is an application of the dynamic and simultaneous process of aggregate supply and demand. Obtained differential equations are used for solve the model. To estimate the coefficients of the model and comparing the results with theoretical expectations of the model, Generalized Method of Moment (GMM) in econometrics is applied. These results have met all the expectations with an acceptable accuracy margin and in the analytical part of this article the economic data of Iran is reflected on accordingly. The final results have identified four various business cycles of expansion and contraction from 1980 on.
JEL classification: E31, E32