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In this study, I develop a structural macroeconomic model for Iran, an oil exporting country, highlighting the transmission channels of oil prices to the housing market. The model combines three blocks of macroeconomic interest consisting of money, goods and foreign exchange markets with the housing market. I identified and estimated the model using a Bayesian structural vector autoregressive framework. I also use posterior model probabilities to deal with uncertainty in the identification scheme and Bayesian Monte Carlo integration methods to obtain the correct posterior distribution for the structural parameters and to generate accurate confidence intervals for the impulse responses. The findings indicate that oil price shocks have a positive and persistent effect on housing activities. In contrast, money expansion has limited effect on housing market variables. Quantitatively, in the medium and long run, positive oil shocks explain about 28% of the variation in housing stocks and 21% of the variation in real housing prices. By contrast, money shocks explain 11% and 5% of the variation in housing stocks and housing prices, respectively |
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