The sudden drop in crude Oil prices during the Coronavirus pandemic, once again rises the concern about Oil countries future if Oil diminishes. This paper uses a multi-country general equilibrium model to project the effects of eliminating Oil revenues. The model consists of 5 Oil exporters (i. e., Iran, Kuwait, Saudi Arabia, Kazakhstan and Russia), 25 non-Oil exporting countries, and the rest of the world. The Oil income is modeled as a capital flow, which allows a surplus in capital account for the Oil exporters and balances the current account deficits. The results show that, when Oil revenue diminishes, relative GDPs, welfares, aggregate price indexes and manufacturing price indexes reduce; though, manufacturing share increases in all of the 5 Oil countries. Specifically, Iran`s GDP falls by 15 percent (relative to the world) and the real welfare falls by 13 percent. Our results projects and quantifies the very difficult economic condition arises by Oil income elimination.

Regarding Iran national budget dependence on Oil revenue and its side effects on other macroeconomic variables such as liquidity and economic stability, Oil revenue hedging investigated in this study. Iran Oil revenue is calculated by Dollar but it is received by Euro or other counterparts currencies. Therefore, Oil revenue is not only encountered to Oil price decrease risk, furthermore, but it also faces the second risk that is dollar devaluation against commercial counterparts' currencies. Therefore, any dollar devaluation against Iran Oil buyers currencies is the second source of the risk factor for Oil revenues. Since these two risk sources are not mutually independent, in this paper Oil revenue hedging evaluates by using modern integrated hedging approach and compares by separate (non-integrated) hedging results. Considering nonlinear relationships between financial variables and their specific features by using Vine Copula-GARCH approach, separated and integrated hedged portfolios has constructed and their efficiency examined. In separate hedging, regarding Oil price decrease risk and Dollar devaluation risk independently, reduces Iran Oil revenue risk about 40 and 6 percent respectively, meanwhile integrated hedging can decrease Oil revenue fluctuation about 60 percent since considering Oil price and dollar value interdependence. As results, according to in-sample and out-of-sample efficiency, Integrated hedging outperforms separate hedging and because of less needed contracts, it incurs low transactions cost.

The main question which this paper has dealt with is: What the role of Oil revenue is in political development? Using the theories on the rentier state such as those of Luciani, Lane, and the like, the research has compiled several hypotheses on the basis of these theories. The main hypothesis of this paper is that "Oil revenue plays an important role in the political development of countries with rentier states." This hypothesis was broken down into some sub-hypotheses which explain the mechanism of the relationship between Oil revenue and political development. These hypotheses were tested by the comparative method. Political development is defined by seven indices, and countries of Iran, Saudi Arabia, Turkey and Malaysia were chosen to be studied. The political development indices of these counties were compared with one another, in a specific period of time. The results of the research showed that Saudi Arabia which has the greatest Oil revenue has the lowest level of political development. Iran has a slightly better place than Saudi Arabia in this ranking. But Turkey and Malaysia which hardly have any considerable Oil revenues are more politically developed than the rentier states of Saudi Arabia and Iran.

This article analyses the effect of replacing Oil revenue with tax revenue on Iran's institutional quality. For this purpose, good governance index that is derived from the mean of 6 good governance indices, Voice and Accountability, Political stability, Government Effectiveness, Regulatory Quality, Rule of Law and Control of Corruptionwas, considered as indicators of the institutional governance quality. The Threshold model of Oil revenue effect on the governance quality in Iran, over the period 1996: 1-2017: 1 estimated by Smooth Transition Regression Model (STR). The inverse U-shaped relationship between the share of Oil revenue from GDP and the good governance index and a direct relationship between the share of tax revenue from GDP and this index are obtained. The Estimated threshold level of Oil revenue impact for good governance index was equal to 2. 378 percentage. The scenario of a 10% decrease in Oil revenue and a 10% increase in tax revenue showed that this replacement resulted in a 11% improvement in the quality of governance in Iran. It is therefore recommended that the reform of the tax structure in Iran be put on the agenda of the government and parliament in order to meet the government's financial needs as well as the state's independence from Oil. The government, through its competitiveness and accountability mechanisms, supports the establishment of civil society institutions and enhances the power of citizens to help raise tax revenue.

The IMF reports that, over 60% of foreign trade income and 40% of government revenue of Iran comes from the Oil and gas sectors, which has always been a source of volatilities in the economy. The imposed sanctions on the Iranian economy also influence economic activities by reducing currency earnings and restricting access to capital and intermediaries goods. Understanding extent of the shocks’ effects of sanctions and fluctuations in Oil revenue, are key factors for the policymakers in foreseeable planning risks. In order to examine the effect of sanctions and Oil price(revenue) fluctuations on the country's economy, this paper intends to quantify the effects of sanction by making use of a VARMAX GARCH-in-Mean Asymmetric BEKK model in terms of structural failure of the conditional variance. We use real non-Oil GDP, Iranian heavy Oil exports, exchange rates, total stock market index and sanctions index data over 1991: Q2 to 2018: Q1. The results show that a shock of Oil revenue or sanctions index affects activities in all of three sectors. The increasing sanctions pressure leads to a spillover effect of uncertainty to all sectors under study and a decline in production activities and national currency depreciations; but in turn the relative share of the stock market in the portfolio of investors' choice increases. Strong evidence for asymmetric effects of impulses of sanction and Oil revenue on the study sections is observed.

The Iranian economy is intensely affected by the size of the government and Oil income. Oil incomes might influence the relationship between inflation and government size since financing the budget in Iran is based to a significant degree on Oil revenues. Due to the significance of government size and Oil income on the price level, the Oil revenue-government size-inflation nexus in Iran during the period 1991-2021 is considered. Estimation results of a Markov switching model recommend that government size incorporates a significant positive affect on inflation. Moreover, the growth of Oil income is found to have a significant negative affect on the inflation. Based on the findings, it appears that there are two regimes being considered: Regime 1, which represents a high inflation regime, and Regime 2, which represents a low inflation regime. Our findings suggest that once in the low inflation regime (Regime 2), there is a moderate chance of remaining in that state. However, if initially in the high inflation regime (Regime 1), there is a higher probability of staying in that state and a lower probability of transitioning to the low inflation regime.

Oil revenue is the major source of foreign exchange revenues in Iran economy. Since the Oil sector managed by the government, the exchange rate in Iran is highly affected by the government decision. Also Oil revenue is a function of Oil price and its world demand. So the Iranian economy was fluctuated by uncertainty in the amount of Oil revenue. Consequently uncertainty should have the major role in determining exchange rate.The main aim of this article is to analyses main factors of determining exchange rate including uncertainty in the market. For this purpose, future equilibrium exchange rate is estimated based on the assumptions of two scenarios including uncertainty factors. Comparing the equilibrium and controlled exchange rate shows that there is a high deviation between current rate and equilibrium exchange rate which will create a sharp increase of exchange rate in the future.

In this paper, we analyze the effects of Oil revenue shocks on different sectors of Iranian economy using the quarterly data of the Iranian economy and a time varying parameter VAR model. Oil revenue is modeled to be an exogenous variable and the parameters are estimated in Bayesian context using Gibbs sampling. The results show that the value-added of industry and mining, and services increase after a positive Oil revenue shock. The response of agriculture, and Oil and gas sectors is not significant. The results also show that after the war, the response of industry and mining, and Oil and gas sectors are higher, relatively.

Oil exporting countries are continuously subject to Oil price shocks. They have to deploy effective policy instruments and fiscal rules to manage the negative effects of these shocks. Sovereign wealth funds have been developed as stabilizing instruments to smooth the government expenditures and provide financial resources for optimal domestic investments. This paper develops and calibrates a dynamic general equilibrium model under uncertainty conditions to develop a fiscal rule for the optimal allocation of Oil revenues between saving and current expenditures in a 65 year horizon. According to the results, a conservative fiscal policy in the booming periods is highly advised, since permanent Oil shocks are more frequent than transitory shocks. During Oil booms, excess Oil revenues should be allocated to the National Development Fund (NDF) or the Foreign Exchange Reserve Account. The results also show that optimal investment rate increases is higher in the long run since in a longer term horizon the social planner allocates more funds to NDF to compensate for the negative Oil shock.

Crude Oil price risk is crucial for Oil exporting countries. Consequently, developing a risk hedging mechanism has great importance for these countries. Given that Value at Risk (VaR) is one of the most powerful tools for evaluating price risk, this paper has tried to design a mechanism for risk management of Iranian Oil revenues using the VaR measure. In this regard, Autoregressive Conditional Heteroskedasticity models including GARCH, CGARCH and EGARCH with different destiny distribution functions are utilized for calculating VaR of OPEC crude Oil price in the period of 6 October 2005 to 29 August 2015. The results show that CGARCH model with t- student distribution outperforms the other methods in terms of forecast error measures. The implementation of CGARCH model with using the data of Iranian Oil production in 2014 reveals that the proposed model can lead to a significant surplus income.