The Dynamic Effects of Fiscal Policy Shocks on the Variables of Production, Consumption and Private Sector Investment in IRAN

Document Type : Scientific paper

Authors

1 Department of Economics, Faculty of Humanities University of Zanjan,Zanjan,Iran

2 MA student of Economics, Faculty of Humanities, University of Zanjan,Zanjan,Iran

Abstract

This study has examined the dynamic effects of government expenditure and government shocks on production, consumption and investment variables of the private sector. The statistical population of this research is Iran and the data is a seasonal time series for the time period 1992: 1 to 2015: 4 with the fixed prices of the year 1376. The research has been carried out using statistical analysis and econometrics based on the theoretical principles of Blanchard-Perotti in 2002 and the LP model by Jorda in 2005. The results of the LP immediate responses model state that the Gross Domestic Product response to government spending shocks has meaningful and positive relations and it does not affect the tax shock in short term decreasing run also in long term run. Following these results, the effects of government expenditures on private sector investment in the short term run are decreasing and it has positive and significant effects in long term runs, and the effects of tax shocks on private sector investment are decreasing and significant. The results of the private sector responses to government expenditures and tax shocks are also positive and significant.

Keywords

References

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Macroeconomics Research Letter
Volume 13, Issue 26
November 2018
Pages 79-100

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History

  • Receive Date: 10 July 2018
  • Revise Date: 10 September 2018
  • Accept Date: 08 October 2018

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