This paper, I have focused on the tax side of the fiscal policy to  investigate the past and future behavior of fiscal sustainability in Iran. To do so, I have employed two different forward-looking and backward-looking approaches. First, the backward-looking approach is the fiscal policy rule proposed by Daving & Leeper (2011). Precisely, this rule determines that whether the fiscal policy is ...

This paper examines under what conditions fiscal policy in the form of government spending should contribute to macroeconomic stabilisation. To this end optimal fiscal targeting rules minimising the microfounded social loss are examined in the following settings. Firstly, for the benchmark New Keynesian model, where monetary policy is unconstrained, a neutrality result for fiscal obtains: fisca...

Abstract T his paper is to convince the usage of the nonlinear unit root tests when dealing with a nonlinear model. To do so, the stationary test for variables in a model titles “Fiscal Reaction Function in Iran” has been applied according to both the ordinary and the Nonlinear Dickey-Fuller (NDF) tests. Results show that while variables under investigation are stationary ...

Japan is the world‘s third largest economy. But currently economic situations of Japan are not stable. It is not increasing as expected. Since 2013 it was world second largest economy but Japan loosed its placed to China in 2014 due to slow growth of important economic indicators. By using the basic Keynesian model, we will provide a detailed analysis of the short and long run impacts of the ch...

Imperfectly competitive macroeconomic models typically assume a symmetric equilibrium with identical firms, despite the fact that most industries are characterised by substantial degrees of firm heterogeneity. We examine how inter-firm efficiency gaps affect fiscal policy effectiveness under monopolistic competition.

This paper studies the interactions of fiscal and monetary policies in the presence of fiscal spillovers within a monetary union. When capital markets are integrated, the fiscal policy of any member country will influence equilibrium wages and interest rates across the whole union. Thus there are fiscal spillovers within a federation. Within a general class of monetary policy rules, there does ...

The literature testing for long-run impacts of fiscal policy on growth at the macro level has generally ignored short-run dynamics and treated all counties’ fiscal-growth dynamics identically. This paper examines how robust previous ‘long-run’ results for OECD countries are to new empirical methods that model short-run dynamics and allow fiscal-growth responses to be heterogeneous both across c...

In recent years, inequality has risen in the region alongside rapid economic growth. The widening income gap strengthens the case for a government response, and fiscal policy is one of the most suitable policy instruments to promote a more equitable society that provides opportunities for all. Developing Asia has trailed other parts of the world in equity-promoting fiscal expenditures, namely e...

The term fiscal sustainability has many definitions, though it almost always refers to the fiscal policies of a government or the public sector. One concept of sustainability relates to solvency, the ability of the government to service its debt obligations in perpetuity without explicit default. Rarely does fiscal sustainability analysis reach the conclusion that a government is insolvent unle...