Document Type: Research Paper

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  • Erfan Mehregan
  • Alireza Moradi *

Department of Management, Sharif University of Technology, Iran

Economic Department, Islamic Azad University, Kermanshah Branch, Kermanshah, Iran

Received: 11 May 2017                    Accepted: 15 June 2017                    Published: 01 September 2017

 10.22034/MBT.2017.86983                                                              XML Files


This paper presents the results of an empirical investigation of business cycle nonlinearities and asymmetries in the Iranian economy. Seasonal Gross Domestic Products (GDP) time series are subjected to nonlinearity and asymmetry tests. The recessions and expansions states are modeled with Markov-Switching Autoregressive models (MSM). The paper shows that allowing for three regimes for the finding of asymmetry and nonlinearity in Iranian business cycle fluctuations. The paper also provides evidence on the usefulness of a non-linear model as compared with a linear alternative in the context of business cycle research in an emerging economy using LR test.