The Asymmetric Effects of Fiscal Policy Shocks on Iranian Economy: DSGE Model with Second order Approximation

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raeisi gavgani zahra sadat; MOHAMMADI TEIMOUR; GAFFARI FARHAD; MEMAR NEJAD ABBAS

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Journal: Iranian Journal of Economic Research Year:2019 | Volume:23 | Issue:77 Page(s): 37-72

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Title

The Asymmetric Effects of Fiscal Policy Shocks on Iranian Economy: DSGE Model with Second order Approximation

Author(s)

raeisi gavgani zahra sadat | MOHAMMADI TEIMOUR | GAFFARI FARHAD | MEMAR NEJAD ABBAS | Issue Writer Certificate

Keywords

Fiscal Policy ShockQ1

Asymmetric EffectsQ2

Government SpendingQ2

Dynamic Stochastic General EquilibriumQ2

Abstract

The purpose of this paper is to investigate the existence of nonlinear effects of the fiscal policy. Specifically, the Asymmetric Effects of equal fiscal shocks (of Government Spending) on macroeconomic production variables are studied. In this regard, a Dynamic Stochastic General Equilibrium (DSGE) model consistent with the conditions of the Iranian economy during the period 1369 – 1393 is used. We present theoretical foundations of the Asymmetric Effects of fiscal shocks on macroeconomic variables, then we refer to two strands of studies; the first one emphasizes nonlinearity in the effect of fiscal policy, and argues that nonlinear effects are associated with large and persistent fiscal impetus for industrial and developing countries. The second strand of studies emphasizes expectations about fiscal adjustment for debt sustainability during large fiscal adjustments rather than in normal times. The results show that the positive and negative impacts of government expenditures have Asymmetric Effects on macroeconomic variables. The effect of negative shock of Government Spending on consumption, investment and production of the private sector as well as total production is stronger, more stable, and larger. On the other hand the effect of positive Government Spending shock on these variables is smaller having more temporary impact.

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APA: Copy

raeisi gavgani, zahra sadat, MOHAMMADI, TEIMOUR, GAFFARI, FARHAD,. (2019). The Asymmetric Effects of Fiscal Policy Shocks on Iranian Economy: DSGE Model with Second order Approximation. IRANIAN ECONOMIC RESEARCH, 23(77 ), 37-72. SID. https://sid.ir/paper/364296/en

Vancouver: Copy

raeisi gavgani zahra sadat, MOHAMMADI TEIMOUR, GAFFARI FARHAD. The Asymmetric Effects of Fiscal Policy Shocks on Iranian Economy: DSGE Model with Second order Approximation. IRANIAN ECONOMIC RESEARCH[Internet]. 2019;23(77 ):37-72. Available from: https://sid.ir/paper/364296/en

IEEE: Copy

zahra sadat raeisi gavgani, TEIMOUR MOHAMMADI, FARHAD GAFFARI, an, “The Asymmetric Effects of Fiscal Policy Shocks on Iranian Economy: DSGE Model with Second order Approximation,” IRANIAN ECONOMIC RESEARCH, vol. 23, no. 77 , pp. 37–72, 2019, [Online]. Available: https://sid.ir/paper/364296/en

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