Investigating the Existence of New Non-Ricardian Regime Policy in Iran

Document Type : Research Paper

Authors

1 PhD Student Economics Dept. Economics School Shiraz University

2 Faculty member Economics Dept. Economics School Shiraz University

3 University Professor. Shira University School of Agriculture Agricultural Economics

4 faculty member Economics Dept. Economics School Shiraz University

Abstract

The aim of this paper is to investigate the existence of the New Non-Ricardian regime policy in Iranian economy. We detected signs of the Non-Ricardian regime from quarterly data of 1369 to 1391. To investigate further a dynamic stochastic general equilibrium model is designed to estimate the fiscal and monetary parameters using a Bayesian approach. Our results indicated a passive monetary policy and an active fiscal policy presence which are evidence of a New Non-Ricardian regime. To prove the robustness of our results, criteria such as posterior odds ratio and impulse response functions are used in this research. Based on posterior odds ratio, Non-Ricardian policy has more ability to describe data than Ricardian policy.  According to the impulse response function, in reaction to positive government debt shocks, Non-Ricardian policy implementation is more compatible with the behavior of the Iranian economy than the other.
JEL Classification: E12, E31, E42, E43

Keywords


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Volume 51, Issue 3 - Serial Number 116
October 2016
Pages 735-756
  • Receive Date: 26 October 2015
  • Revise Date: 03 February 2016
  • Accept Date: 14 February 2016
  • First Publish Date: 22 October 2016