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Nowadays housing is not considered merely as a matter of shelter anymore. But it is also considered as a political and economic commodity. Not only housing is one of the most important assets for householders, who hold it to accept higher risks in financial markets, but also it is an indispensable good without any substitute. Recent decades, housing sector has encountered inflationary recessions and booms along with interminable price growth in Iran. This inflation rate is as a result of excessive increases in liquidity, which is due to the spending of oil dollars. However, the inflation rate may be controllable in consumption and tradable goods by some leverages such as imports while it is not controllable in nontradable goods such as housing and land. Consequently, it brings about severe and unpredictable volatilities in the price of this critical sector. In this article, we study the major determinants of housing sector with special emphasis on the relationship between oil shocks and housing inflation. The findings show that during the period 1973 to 2005 the effect of the population growth rate, liquidity growth rate, the growth rate of loans paid by Bank Maskan and (positive and negative) oil shocks on housing inflation are statistically significant and consistent with the theory while the effect of inflation rate on housing inflation is statistically insignificant.

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The interaction between institutional quality and the mechanism of oil shock diffusion might have a significant effect on macroeconomic dynamics in an oil-exporting country. The literature lacks a formal model to address the role of institutional quality in the economic performance of an oil-rich developing economy. Using a new Keynesian dynamic stochastic general equilibrium (DSGE) framework, this study develops a model to investigate the response of macroeconomic variables to changes in institutional quality resulted from oil shocks in Iran as an important oil-exporting country. Our modeling allows us to show how institutional quality and oil revenues affect households, firms, government, and the central bank. The model is solved and calibrated for the period 1959-2017. The results indicate that the destruction of institutional quality caused by a positive oil shock prevents the Iranian economy from reaping the fruits of an increase in oil revenues. Oil revenues and their shocks by destroying the institutional quality through the expansion of rent-seeking ‎activities, increasing transaction costs of production, reducing the impact of government spending, and ‎diverting monetary and fiscal policies from the targets result in negative effects on Iran's non-oil ‎production in the long run.‎ To reduce the destructive effects of oil shocks on institutional quality in the Iranian economy, we suggest the policymakers in Iran reduce the dependency of the government budget on oil revenues.