Investigating the Effects of Shock Caused by Covid-19 Virus on the Iran's Economy: A GVAR Approach

Document Type : Original Article


1 Ph.D Candidate in Economics, Faculty of Economics, Allameh Tabataba’i University, Tehran, Iran

2 Associate Professor, Faculty of Economics, Allameh Tabataba’i University, Tehran, Iran


The corona-virus epidemic and its rapid spread have had major negative effects on the global economy. This article examines its negative shock on the economy of Iran and several selected countries. For this purpose, the Global Vector Auto-regressive model (GVAR) and seasonal data for the years 1990-2019 for 34 countries have been used. The results show that the negative shock of global GDP immediately reduces China's production by 0.7% and is stable for three years. The global shock has slowed economic growth in India, Europe, and the United States by 0.18, 0.5 and 0.2, respectively. Although negative shock to stock markets has not affected the Iranian capital market but has caused the collapse of the capital market in selected countries. Corona virus affects Iran’s economy only by reducing GDP, but since it is a shock to production, its effect is more lasting, and in the first stage, it reduces GDP by 1.9%.


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