Document Type : Original Article
Authors
1 Administration of Economic Affairs and Finance
2 Department of Economics, Faculty of Management and Economics, Islamic Azad University, Science and Research Unit
Abstract
The present study explains the response of the economic welfare index to fiscal deficit and tax policies despite the government's sovereign role for the years 1365-1400. For this purpose, using the structural vector autoregression model (SVAR), the effect of fiscal deficit, government tax policies and other indicators affecting economic well-being were investigated. The findings showed that an impulse from oil price and exchange rate decreases economic welfare by 26 and 15 percent. The response of economic well-being to the impulse from the area of net tax income and production growth is also close to 11 and 32 percent. The results of instantaneous reaction functions for the model show that the response of economic well-being to the impulses from government governance and tax policies from the upper limit to two periods of downward trend and then at the lower limit to two upward periods and finally in the long term is damped to zero. The main channel of influencing economic well-being is done through the optimal size of the government, governance indicators and financial policies. Therefore, the way of financial market liberalization, weak management of the financial system and the lack of formation of coherent financial markets and the benefit of regulations in the country can be seen as the reasons for reducing the efficiency of investment through sub-optimal allocation of resources in the country, which requires more attention and effort in the country.
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