Document Type : Scientific paper
Authors
1
M.A. Student in Economics, University of Gillan, Rasht, Iran
2
Assistant Professor of Economics, Department of Economics, Faculty of Management and Economic, University of Gillan, Rasht, Iran
10.22080/mrl.2025.29765.2194
Abstract
First, during periods of crisis, fiscal uncertainty acts as a 'recessionary anchor,' establishing a strong negative causal link with economic growth. Second, the results reveal a 'paradox of prosperity': emerging from a crisis, economic recovery itself becomes a source of future expenditure uncertainty, exposing the weakness of institutions in curbing pro-cyclical policies. Finally, the absence of a long-run relationship implies the dominance of fundamental and structural factors over fiscal policy uncertainty. These findings, which highlight the sensitivity of the results to the choice of measurement proxy, underscore the complexity of uncertainty's transmission channels in the Iranian economy. An understanding of these dynamic patterns offers crucial policy implications for managing fiscal stability, which are discussed in detail in the paper.
First, during periods of crisis, fiscal uncertainty acts as a 'recessionary anchor,' establishing a strong negative causal link with economic growth. Second, the results reveal a 'paradox of prosperity': emerging from a crisis, economic recovery itself becomes a source of future expenditure uncertainty, exposing the weakness of institutions in curbing pro-cyclical policies. Finally, the absence of a long-run relationship implies the dominance of fundamental and structural factors over fiscal policy uncertainty. These findings, which highlight the sensitivity of the results to the choice of measurement proxy, underscore the complexity of uncertainty's transmission channels in the Iranian economy. An understanding of these dynamic patterns offers crucial policy implications for managing fiscal stability, which are discussed in detail in the paper.
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