Volume 14, Issue 1 (2014)
QJER 2014, 14(1): 1-26 |
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The Impact of Fiscal Dominance on Inflation Rate in Iran Using a Dynamic Stochastic General Equilibrium Model. QJER 2014; 14 (1) :1-26
URL: http://ecor.modares.ac.ir/article-18-10903-en.html
URL: http://ecor.modares.ac.ir/article-18-10903-en.html
Abstract: (11808 Views)
In this paper, we design a Dynamic Stochastic General Equilibrium (DSGE) model to investigate effects of fiscal dominance on inflation rate in Iran and solve it by calibration method. In order to getting reliable results, the second-order moments of main variables were compared based on actual and simulated data; and functions of impulse response to model innovations were considered. The results show that the degree of fiscal dominance in Iranian economy is about 92%, i.e., the independence degree of monetary and fiscal policies is nearly 8%. Therefore, decreasing fiscal dominance may lead to decreasing inflation rate in Iran. In addition, any action for increasing independence of central bank and decreasing dependence of government on seigniorage revenue will play important role in reducing inflation rate in Iran.
Article Type: Research Paper |
Subject:
C69 - Other|E27 - Forecasting and Simulation|E31 - Price Level; Inflation; Deflation
Received: 2011/12/11 | Revised: 2014/03/10 | Accepted: 2012/05/21 | Published: 2014/03/21
Received: 2011/12/11 | Revised: 2014/03/10 | Accepted: 2012/05/21 | Published: 2014/03/21
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