Considering the importance of government fiscal policy (government spending and state tax income) in economy and its effectiveness in well-being of people, this paper examines the effects of fiscal policy on poverty during the period 1386-1363 in Iran. In this paper, considering the fact that poverty changes can be divided to changes in economic growth and changes in income distribution; initially using Auto-Regressive distribution lags (ARDL) model, the effects of fiscal policy on economic growth and income distribution also have been investigated and then by using Vector Auto Regressive model (VAR), mutual influences among the variables of poverty index (sen index), economic growth rate and income inequality index (the ratio of the top ten percent of income to the last ten percent of income) is considered. The results of this study suggest that consumer spending and government’s tax revenues caused worsening of poverty index (poverty increasing in the community) construction spending also caused the government to improve social indicators of poverty (reducing poverty in the community).
JEL Classification: H39, I38, O23