Determination of Optimal Fiscal Policy for iran’s Economy: A Dynamic Stochastic General Equilibrium (Dsge) Approach

Document Type : Research Article


1 Associate Professor, Department of Economics, Allameh Tabataba'i University

2 PhD student in Economics, Allameh Tabataba'i University


In recent years, the use of fiscal rules to influence fiscal policy and macroeconomic has been expanding in economics literature, so that many countries have various fiscal rules to manage macroeconomic stability and prevent extreme budget deficits. In Iran, this has started from the Fifth Development Plan with the allocation part of the oil revenues to the National Development Fund, but in recent years it has not been able to achieve its goals of stabilizing the economy. In this study, using a Dynamic Stochastic General Equilibrium (DSGE) model, the appropriate rule for Iran is examined using three scenarios: baseline, revenue fiscal rule and budget balance rule. The results show that the budget balance rule can have a suitable performance considering the structure of Iran as an oil exporting country and minimize the policy-making loss function.


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