Narmin Davoudi; Hassan Heidari
Abstract
The role of deep hapbit in countercyclical behavior of mark-up and its impact on the transmission of monetary and fiscal shocks have already been studied, but its strength in the presence of Philips curve with price stickiness is not clear. The purpose of this study is to develop a New Keynesian ...
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The role of deep hapbit in countercyclical behavior of mark-up and its impact on the transmission of monetary and fiscal shocks have already been studied, but its strength in the presence of Philips curve with price stickiness is not clear. The purpose of this study is to develop a New Keynesian Philips Curve (NKPC) following Cristiano et al. (2005), to investigate the simultaneous effect of price stickiness and deep habits on monetary and fiscal shock transmission using Markov- switching stochastic dynamic general equilibrium (MS-DSGE) model for the Iranian economy. The results of impulse-response functions show reducing markup for one period due to deep habits and then increasing markup and inflation after a period due to a stronger role of price stickiness. Moreover, although the negative effect of wealth due to government spending is compensated by deep habits consumption and thus makes consumption increase, it is weak in comparison to the strength of expected inflation, and therefore, inflation increases eventually. Overall, the results of this study indicate that deep habits cannot be a dominant factor in the transmission of monetary and fiscal shocks, but according to the obtained impulse response functions, it can be the strong reason to delay increasing inflation. Also, deep habits consumption can be a good reason for increasing consumption and compensating of the negative effect of wealth due to fiscal shock.
Mohamad Ghasemi; parisa mohajeri
Volume 15, Issue 56 , April 2015, , Pages 75-104
Abstract
Economic fluctuations and emergence of commercial cycles are inseparable parts of any economy. It is obvious that anti-cyclical behaviour of fiscal policies will stabilize the fluctuations. In fact, if the ratio of government expenditure to GDP decreases (increases) during a boom (recession) the behaviour ...
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Economic fluctuations and emergence of commercial cycles are inseparable parts of any economy. It is obvious that anti-cyclical behaviour of fiscal policies will stabilize the fluctuations. In fact, if the ratio of government expenditure to GDP decreases (increases) during a boom (recession) the behaviour of fiscal policy will be anti-cyclical. In this paper, using data released by the Central Bank for the period between 1966 and 2013, a model has been developed to test the anti-cyclical behaviour of fiscal policies in the Islamic Republic of Iran. The Findings of this paper indicate that, firstly, regardless of the calculation method of time series of GDP fluctuations– Hodrick-Prescott and State-Space models– the hypothesis of Iran’s anti-cyclical fiscal policies is rejected. Secondly, Nonconformity of financial rules and means of injection of resources resulted from oil export into government budget are two crucial issues explaining why Iran’s fiscal policies are not anti-cyclical. Thus, institutional reforms, especially budgetary structure of the country, could improve the performance of fiscal policies during the economic cycles
Meysam Rafei; Javid Bahrami; Davood Daneshjafari
Volume 14, Issue 54 , October 2014, , Pages 33-65
Abstract
In this paper by using a dynamic stochastic general equilibrium model we study how macroeconomic variables are affected by different shocks using fiscal reaction functions for Iran’s economy. For this purpose we compare the results of a real business cycles model in a baseline scenario, in which ...
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In this paper by using a dynamic stochastic general equilibrium model we study how macroeconomic variables are affected by different shocks using fiscal reaction functions for Iran’s economy. For this purpose we compare the results of a real business cycles model in a baseline scenario, in which the government does not follow any specific reaction to the shocks and alternatives in which the government reacts counter and pro cyclically to the shocks. Results of the simulations indicate that when the government follows backward looking fiscal rules the deviation of the variables from steady state increases. In other words, in a real business cycle model for the Iranian economy, we show that the consequence of the government’s intervention in the economy is economic instability in Iran.
Zahra Afshari; Shamsolah Shirin Bakhsh; Maryam Beheshti
Volume 12, Issue 45 , July 2012, , Pages 27-54
Abstract
An oil-producing country face fiscal challenges arising from the fact that oil revenue is exhaustible, volatile, and uncertain and largely originates from abroad. The dependence of government revenue on oil proceeds which are unpredictable significantly complicates fiscal management policy in short and ...
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An oil-producing country face fiscal challenges arising from the fact that oil revenue is exhaustible, volatile, and uncertain and largely originates from abroad. The dependence of government revenue on oil proceeds which are unpredictable significantly complicates fiscal management policy in short and long run. Sustainability generally, concerns current and expected future policies. If governments do not expect current and future policies to lead to an intertemporal budget constraint, then the fiscal process would be unsustainable.
This paper has empirically examined the sustainability of fiscal policy in Iran and provides a theoretical framework for analyzing of the sustainability of fiscal policy based on the government intertemporal budget constraint. Co integration and multi co integration methodologies such as Engle-Granger and Johansen-Josilios as well as Barro’s (1979, 1986) Tax-Smoothing Model were used to evaluate fiscal budgeting processes in Iran. It was found that the fiscal budgeting process in Iran is not sustainable and the Iranian fiscal policy, as far as oil and gas income is concerned, is not a fully responsible policy. In addition the evidence in this research shows that the government spending and revenues in Iran are independent.
Abbas Assari Arani; Lotfali Agheli; Saeid Shafiei; Meysam Rasoli Mir
Volume 11, Issue 40 , April 2011, , Pages 31-48
Abstract
Abstract Fair distribution of income has been considered as the most important economic issues in different countries. In recent years, the quality of income distribution and the impact of macroeconomic policies on that has been more considered, ...
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Abstract Fair distribution of income has been considered as the most important economic issues in different countries. In recent years, the quality of income distribution and the impact of macroeconomic policies on that has been more considered, especially after the issue of poverty reduction projects in the world. In today's world, the biggest factor causing poverty is not the lack of income, but it is the unfair distribution. Currently, majority of economists, considered the income distribution as one of the goals of government economic programs and the impact of fiscal policy on that as very important. This paper seeking for examination of the effect of fiscal policies on income distribution in IRAN. For this purpose we use a quantile regression model. In summary, the results show that the government's fiscal policies that impact on the Gini coefficient is not constant, but between different quantiles is different. While these policies in low quantiles do not have significant effects on income distribution, but their effects on the high quantile income distribution is quite significant.