Investigating the Impact of Total Factor Productivity (TFP) Shocks in Agricultural, Industrial and Services Sectors on the Macro and Sectoral variables of Iran’s Economy Dynamic Stochastic General Equilibrium Model Approach

The main purpose of the present paper was to investigate the effect of Total Factor Productivity shocks in agricultural, industrial and service sectors on macro and sectoral variables of Iran’s economy. Accordingly, we carried out this research based on statistical data of the period 2002-2015 and the specification of a dynamic scholastic general equilibrium model.The specified pattern was solved and simulated using the calibration method and the Dynare software. The results from model simulation indicate that TFP shocks (the technology factor in the production function) in all of the three aforementioned sectors, consistent with the theory of the subject, had increasing effect on total production, sectoral production, private consumption and investment in the first period of application of shocks, and the economy reached equilibrium again after several economic periods. These shocks also had initial reducing effects on variables such as employment, wage, private consumption of imported goods, inflation, real exchange rate, changes in currencies and exports in the three sectors which increased in following periods and the economy reached equilibrium again.