Document Type : Original Article
Authors
1 Professor, Department of Theoretical Economics, Faculty of Economics, Allameh Tabataba'i University, Tehran, Iran. (
2 Ph.D. Student, Department of Theoretical Economics, Faculty of Economics, Allameh Tabataba'i University, Tehran, Iran.
Abstract
The use of fiscal policies with an impact on the gross domestic product allows governments to step in the direction of economic stability by reducing or increasing production in the necessary conditions. However, the effectiveness of fiscal policy is one of the most controversial topics among economists and researchers. The government spending multiplier is one of the things that determine the effectiveness of fiscal policy, and according to the changes in the parameters of the economic model over time, the estimation of the government spending multiplier over time is very important for the effect on the economy. Therefore, in this paper, the estimation of the government spending multiplier in Iran's economy with the TVP-FAVAR with seasonal data is discussed. The results show that the size of the government spending multiplier fluctuates between the values of 0.63 and 2.3 in the investigated time period. Most of these changes are caused by cyclical factors of the economy. On the other hand, structural factors play a minor role in the results. Therefore, according to the findings of the research, for the effectiveness of fiscal policy, more attention should be paid to the state of the economy in business cycles than other factors
Keywords
- Government spending multipliers
- Time-varying parameter FAVAR models
- Business cycle
- fiscal multipliers
Main Subjects
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