Document Type : Research Paper
Authors
1 Ph.D. student in Economics at Ferdowsi University of Mashhad, Mashhad, Iran
2 Department of Economics, Ferdowsi University of Mashhad, Mashhad, Iran
3 ferdowsi university of mashhad
Abstract
Uncertainties are an intrinsic element of economic systems, exerting substantial and complex effects on various economic structures. Oil prices, in addition to being a crucial factor in production, are also a key indicator of oil revenues within Iran's economy. This study investigates the impacts of economic policy uncertainty and geopolitical uncertainty, originating globally as well as from China, the United States, and Russia, on Iran’s crude oil prices. The analysis is conducted using the Generalized Additive Model (GAM) with monthly data from 1997 to 2022. The results indicate that economic policy uncertainty at the global level, as well as that originating from China and Russia, has a significant and nonlinear effect on Iran’s crude oil prices. Similarly, geopolitical uncertainty originating globally, from China, and from Russia has a direct and nonlinear influence. In contrast, geopolitical uncertainty from the United States shows a linear and inverse relationship with Iran’s crude oil prices. Moreover, the study explores the effects of concurrent uncertainties from the same source, revealing that simultaneous uncertainties originating globally, from Russia, and from the United States, have substantial and nonlinear impacts on Iran’s crude oil prices. These findings highlight the importance of employing advanced models capable of accounting for the joint effects and interactions of multiple variables. The insights provided by this research are valuable for stakeholders in oil markets and policymakers involved in managing the complexities of financial and geopolitical dynamics.
Keywords
- Uncertainty of economic policy
- geopolitical uncertainty
- Iranian crude oil price
- generalized additive model (Gam)
Main Subjects
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