The Impacts of Supply and Demand Shocks On Agriculture Growth

In the recent decades, the Iranian Economy has been highly depended on Oil revenues. Considering the fact that a great part of non-oil exports are agricultures product, studying factors influencing growth of agricultural sector plays an important role in the Iran's economy. Supply domestic shocks and domestic demand pressure along with deviation of exchange rates from its equilibrium, have significant effects on the growth of agricultural sector. In this study, we examine the impact of supply and demand shocks on the economic growth, using the model of Blanchard and Quah and the method of Vector Auto Regression. The study data was obtained from the annual statistics during the years 1972-2007. The results revealed that the growth of agricultural sector is more sensitive to supply shocks than to demand shocks.