The Effect of Term of Trade᾿s Shocks on Private Saving in Iran

The term of trade’s shocks, as one of the main sources of economic fluctuations in developing economies and affecting macroeconomic variables, including private saving, is one of the important factors determining of capital formation and economic growth and development of countries. Iran is one of the countries that accounts for a large part of its export revenues from the export earnings of oil resources. Therefore, considering the dependence of Iranian economy on oil revenues and the important role of private saving in economic growth and development of the country, consideration of the factors affecting private saving , including the effect of term of trade volatility, is of great importance .Few studies have been conducted on the effect of term of trade’s shocks on private on saving, to date, no study has been carried out on the issue in Iran Therefore, the present study uses the time series data of 1360 to 1396 to study the effect of term of trade fluctuations on private saving in Iran. In this study using GARCH model, the amount of fluctuations of the country's term of trade relationship has been achieved for these years. And the effect of the effect of term of trade’s shocks on private on saving using the ARDL and Error Correction Model self-explanatory pattern. In order to study the stability of the model's coefficients, Cumulative Residual Tests (CUSUM) and Cumulative Waste Squares (CUSUMQ) have been used The results revealed that show a negative relationship between effect on the term of trade’s shocks and private saving in the period under study.