Study of Effects of Fiscal Policies in IRAN with an Emphasis on Macro-economic Environment

Subject Areas : Applied Economics

Elham gholami ¹ (ندارد)
Kambiz Hozhabr Kiani ² (مسئول مکاتبات)

Received: 2015-07-31 Accepted : 2015-07-31 Published : 2014-07-23

Keywords: : Fiscal policy Shocks, Macroeconomic Environment, Narrative Approach, Combined Dummy Variable,

Abstract :

This paper seeks to answer the question whether macroeconomic environment in the event of fiscal policies shocks will affect their efficiency. For this purpose, a two-stage approach and data during years 1357 to 1391 are used. First, fiscal policy shocks were recognized as the residuals from estimating of first-order autoregressive model for government spending and tax revenues. Next, the shocks were considered as explanatory variables in the specified function. In addition, narrative approach is used to demonstrate the effects of economic position on the efficiency of identified shocks have been used by traditional methods. Thus, the macroeconomic environment on the basis of the key macroeconomic variables including money growth, inflation and unemployment to economic good and bad conditions is separated and composed using a combined dummy variable in the model. The results show the efficiency of government spending and tax shocks is dependent to the macroeconomic environment. JELClassification: K34, H21, C33