Asymmetric Effect f Oil Price on Residential Market in Iran: Application of NARDL Method

Looking at the trend of oil price in Iran economy, it seems that the oil boom periods have been accompanied by an increase in residential prices, but there isn’t reverse of this relation in oil recession periods. Therefore, the analysis of the relationship between residential price and oil price requires an asymmetrical model. In this study, the effect of oil price on housing price in asymmetric shape in 1972-2015 periods has been analyzed using Shin et al. (2014). For this purpose, a nonlinear autoregressive distributed lag (NARDL) approach has been used. The results confirm the asymmetric relationship between oil price and the residential price index. So that, in the short and long run, the increase in oil price has a positive and significant effect on residential price, while the decreasing in oil price does not have a significant effect. In summery the result of this study provides a new explanation of the Business cycle of the residential market and the global oil price is introduced as an effective variable in this cycle. But the role of this variable is confirmed only during the period of increasing oil price. Another finding is that consumer price index has a positive and significant effect on residential price in the short-run and long-run.