Investigating the Asymmetric Effects of Business Cycles on Consumption and Wealth Accumulation in Iran

Document Type : Scientific paper

Authors

1 Department of Theoretical Economics,, University of Mazandaran

2 Associate Professor in Energy Economics, University of Mazandaran

3 M.A. in Economics, University of Mazandaran,

10.22080/mrl.2025.28582.2156

Abstract

Production and its fluctuations are one of the factors affecting economic welfare. Business cycles, especially booms and busts, have a direct impact on welfare, and business cycles are intricately linked to consumption patterns during these periods. The relationship between booms and busts has a significant impact on wealth flows, capital movements, household wealth, and income inequality. The flow of consumption and the accumulation of wealth reflect the patterns of consumer behavior and capital storage. The country is currently facing multiple challenges regarding consumption flow and wealth accumulation, which significantly impact economic growth and welfare. The aim of this study is to investigate the asymmetric effects of booms and busts on consumption and wealth accumulation in Iran during the years 1971 to 2023. To analyze the asymmetric effects of output, this study employs the nonlinear autoregressive distributed lag (NARDL) method. The results indicate that economic booms lead to an increase in consumption and wealth accumulation, while economic busts lead to a decrease in them. Furthermore, the adverse effects of busts on consumption and wealth accumulation are significantly greater than the positive effects of booms, and these asymmetric effects intensify in the long run. In addition, inflation and unemployment have a negative impact on consumption, while government size has a positive impact. Similarly, inflation and government size directly affect wealth accumulation, while the unemployment rate has an inverse effect.

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Macroeconomics Research Letter
Volume 20, Issue 48
December 2025

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History

  • Receive Date: 07 February 2025
  • Revise Date: 20 March 2025
  • Accept Date: 25 April 2025

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