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Journal of Money & Economy


(رتبه علمی-پژوهشی)

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:: year 6, Issue 17 (fall 2013) ::
JMBR 2013, 6(17): 63-82 Back to browse issues page
Assessing Fiscal Sustainability in Iran
Zhaleh Zarei * 1, Jalali-Naini Ahmad Reza2
1- Monetary and Banking Research Institute
2- Institute of Planning and Management Studies
Abstract:   (3636 Views)

Fiscal policy is said to be sustainable if the present value of future primary surpluses equals the current level of debt. In this paper we empirically examine the sustainability of public finances in Iran, during the period 1991-2011. Our analysis is based on Hamilton and Flavin (1986) and Martin (2000) criterion. There are four estimation approaches for testing fiscal sustainability in long-run: Engle & Granger, Johanson-Joselious, Dynamic Ordinary Least Squares (Dols) and Fully–modified Ordinary Least Sqaure (FMOLS). Also, we use sustainability indicator, primary deficit gap index, which are related to the intertemporal budget constraint in short run. Results, notably, show that fiscal sustainability is weak in long-run. Furthermore, assessing fiscal sustainability indicators in each year excluding oil revenues indicates that, fiscal policies have been unsustainable. On the other hand, despite considering oil revenue as part of government revenue resources, fiscal policy is sustainable only between 2003 and 2011.

Full-Text [PDF 471 kb]   (1353 Downloads)    
Type of Study: Empirical Study |
Received: 2014/08/3 | Accepted: 2014/10/22 | Published: 2014/10/22
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year 6, Issue 17 (fall 2013) Back to browse issues page
فصلنامه پژوهش‌های پولی-بانکی Journal of Monetary & Banking Research
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