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:: year 7, Issue 21 (Autumn 2014) ::
JMBR 2014, 7(21): 329-359 Back to browse issues page
Estimating the Degree of Fiscal Dominance and its Welfare Costs in a Dynamic Stochastic General Equilibrium
Hossein Tavakolian
Allameh Tabataba'i University
Abstract:   (1752 Views)

This paper studies the degree of fiscal dominance and its costs for the economy of Iran in a DSGE model. Resende & Rebei (2008) approach is used to model the degree of fiscal dominance and Leeper, Walker & Yang (2010) approach is used to model government investment. According to the first study it is assumed that a fraction of government debt is backed by discounted value of current and future primary surplus and the remaining fraction is backed by seigniorage. According to the second study, it is assumed that there is an implementation delays for building public capital projects. The results show that higher degree of fiscal dominance significantly affects the dynamics of all the main variables so that in in high fiscal dominance regimes there are lower output and higher inflation. The implementation delay is most effective when the shocks are from government.

Full-Text [PDF 1410 kb]   (1965 Downloads)    
Type of Study: Empirical Study |
Received: 2015/06/24 | Accepted: 2015/06/24 | Published: 2015/06/24
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year 7, Issue 21 (Autumn 2014) Back to browse issues page
فصلنامه پژوهش‌های پولی-بانکی Journal of Monetary & Banking Research
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