The Effects of Fiscal Policy on Macroeconomic Activities: Evidence from Iran
This study investigates how fiscal policy shocks affect macroeconomic activities in an oil exporting economy using a real business cycle model (RBC). We make distinction between public sector of economy from private sector and evaluate the effect of public crowded- (in or out) effect on private sect...
| Main Authors: | , |
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| Format: | Article |
| Language: | fas |
| Published: |
Allameh Tabataba'i University Press
2017-12-01
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| Series: | Faslnāmah-i Pizhūhish/Nāmah-i Iqtisādī |
| Subjects: | |
| Online Access: | https://joer.atu.ac.ir/article_8564_e8f94ff04050da56ec42ac1724847bbf.pdf |
| Summary: | This study investigates how fiscal policy shocks affect macroeconomic activities in an oil exporting economy using a real business cycle model (RBC). We make distinction between public sector of economy from private sector and evaluate the effect of public crowded- (in or out) effect on private sector. Our findings indicate that in Iran, a positive fiscal expansion- a positive consumption expenditure shock- does not have a positive, sizeable and permanent effect on the investment, employment and production of private sector. On the other hand, the results show that the shock has a negative effect on private sector consumption expenditure. This result is consistent with the Ricardian equivalence theorem, suggesting that a government cannot stimulate spending since people assume that whatever is gained now will be offset by higher taxes in the future. |
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| ISSN: | 1735-210X 2476-6453 |