The Effect of Financial Policies on Iran’s Macroeconomic Variables: Evidence from Bayesian Structural Vector Autoregression Model

Document Type : Research Article

Authors

1 Ph.D Student in Economics, Department of Economics, Faculty of Economic and Social Sciences, Bu-Ali Sina University, Hamedan, Iran.

2 Professor, Department of Economics, Faculty of Economic and Social Sciences, Bu-Ali Sina University, Hamedan, Iran,

3 Professor, Department of Economics, Faculty of Economics and Social Sciences, Bu-Ali Sina University, Hamedan, Iran

Abstract

According to some common views in macroeconomics, fiscal policy can be effective in stabilizing the economy and achieving macroeconomic goals. The past few decades have seen the widespread use of monetary policy tools for this purpose. Since the onset of the global financial crisis in 2008, there has been a renewed interest in using fiscal policy as a stabilizing tool. The macroeconomic implications of government expenditures and revenues and their effects on the overall economic structure have been studied by various empirical methods in several countries as well as in Iran. In this paper, far from previous studies, the issue has been implemented using Bayesian structural vector autoregression (B-SVAR). Because this method takes the previous information into account, the B-SVAR method is able to make more accurate estimates than other VAR models. Empirical findings show that government spending and income (income tax) have a limited effect on macroeconomic variables, including GDP, inflation, private sector consumption, income tax and total investment, and in the housing sector. Also, the impact of the private sector on production fluctuations in this model was not confirmed.

Keywords

Main Subjects

References

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Journal of Applied Economics Studies in Iran
Volume 13, Issue 50
August 2024
Pages 9-44

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