Fiscal policy in an Islamic economy and the role of Zakat
This study incorporates Zakat into a simple macroeconomic model of an Islamic economy and analyzes the role of Zakat in the national income determination. The reduced form aggregate consumption function suggests that the determinants of consumption are: Zakat expenditure, taxes, income, and asset ho...
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| Format: | Article |
| Language: | English |
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International Islamic Universiry Malaysia
2006
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| Online Access: | http://irep.iium.edu.my/8025/1/fiscal_policy.zakah.pdf |
| _version_ | 1825644974455128064 |
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| author | Yusoff, Mohammed |
| author_facet | Yusoff, Mohammed |
| author_sort | Yusoff, Mohammed |
| collection | IIUM |
| description | This study incorporates Zakat into a simple macroeconomic model of an Islamic economy and analyzes the role of Zakat in the national income determination. The reduced form aggregate consumption function suggests that the determinants of consumption are: Zakat expenditure, taxes, income, and asset holdings of individuals. Zakat could be used as a counter-cyclical policy through the discretionary and non-discretionary fiscal policy. The discretionary fiscal policy is carried out by varying the disbursement of Zakat to the recipients. During the expansion phase of the business cycle the government reduces Zakat expenditure to
close the inflationary gap. This action helps increase the Zakat surplus in the Baitul-Mal. Likewise the Zakat expenditure could be increased, by using the Zakat surplus accumulated during the boom periods, when the economy is in the down-swing to spur aggregate spending and economic activities. Therefore government spending and taxation could complement Zakat as stabilization policy. |
| first_indexed | 2024-03-05T22:40:47Z |
| format | Article |
| id | oai:generic.eprints.org:8025 |
| institution | International Islamic University Malaysia |
| language | English |
| last_indexed | 2024-03-05T22:40:47Z |
| publishDate | 2006 |
| publisher | International Islamic Universiry Malaysia |
| record_format | dspace |
| spelling | oai:generic.eprints.org:80252013-03-19T01:58:12Z http://irep.iium.edu.my/8025/ Fiscal policy in an Islamic economy and the role of Zakat Yusoff, Mohammed HB Economic Theory This study incorporates Zakat into a simple macroeconomic model of an Islamic economy and analyzes the role of Zakat in the national income determination. The reduced form aggregate consumption function suggests that the determinants of consumption are: Zakat expenditure, taxes, income, and asset holdings of individuals. Zakat could be used as a counter-cyclical policy through the discretionary and non-discretionary fiscal policy. The discretionary fiscal policy is carried out by varying the disbursement of Zakat to the recipients. During the expansion phase of the business cycle the government reduces Zakat expenditure to close the inflationary gap. This action helps increase the Zakat surplus in the Baitul-Mal. Likewise the Zakat expenditure could be increased, by using the Zakat surplus accumulated during the boom periods, when the economy is in the down-swing to spur aggregate spending and economic activities. Therefore government spending and taxation could complement Zakat as stabilization policy. International Islamic Universiry Malaysia 2006 Article PeerReviewed application/pdf en http://irep.iium.edu.my/8025/1/fiscal_policy.zakah.pdf Yusoff, Mohammed (2006) Fiscal policy in an Islamic economy and the role of Zakat. IIUM Journal of Economics and Management, 14 (2). pp. 117-145. ISSN 1394-7680 Http://www.iium.edu.my/enmjournal/ |
| spellingShingle | HB Economic Theory Yusoff, Mohammed Fiscal policy in an Islamic economy and the role of Zakat |
| title | Fiscal policy in an Islamic economy and the role of Zakat |
| title_full | Fiscal policy in an Islamic economy and the role of Zakat |
| title_fullStr | Fiscal policy in an Islamic economy and the role of Zakat |
| title_full_unstemmed | Fiscal policy in an Islamic economy and the role of Zakat |
| title_short | Fiscal policy in an Islamic economy and the role of Zakat |
| title_sort | fiscal policy in an islamic economy and the role of zakat |
| topic | HB Economic Theory |
| url | http://irep.iium.edu.my/8025/1/fiscal_policy.zakah.pdf |
| work_keys_str_mv | AT yusoffmohammed fiscalpolicyinanislamiceconomyandtheroleofzakat |