Investigating the Role of Monetary and Fiscal Policy Tools on Economic Growth Using Dynamic Simulation and Fuzzy Control Approach

Sahar Motamedi (motamedi.sahar@gmail.com) and Mansour Zarra-Nezhad (zarram@gmail.com)
Additional contact information
Sahar Motamedi: Department of Economics, Shahid Chamran University, Ahvaz, Iran.
Mansour Zarra-Nezhad: Department of Economics, Shahid Chamran University, Ahvaz, Iran.
Authors registered in the RePEc Author Service: Mansour Zarra Nezhad (zarram@gmail.com)

Iranian Economic Review (IER), 2016, vol. 20, issue 4, 479-500

Abstract: In this study, a macro-economic model consisting of twelve behavioral equations and fourteen identity equations was estimated with the aim of investigating the effectiveness of monetary and fiscal policies set out in the fourth and fifth development plans. In the estimated model, the variables of development expenditures, current expenditures and tax revenues are used as fiscal policy tools and variables of liquidity and long-term interest rates of bank were used as monetary policy tools. The results of solving the model using a dynamic simulation showed that by the implementation of this scenario, one can achieve a steady growth rate for model’s endogenous variables during the period and reduce its deviation from target values. Then, a fuzzy control system was designed with the aim of minimizing deviations and changes in the deviation of non-oil GDP from the values determined in the fourth and fifth development plans. Liquidity variables and government development expenditures were used as control tools in this system. Results obtained from the fuzzy system showed that using control rules, the growth rate of liquidity can be put at a lower level and growth rate of development expenditure around quantified targeted values in the fourth and fifth development plans. Also, the oscillation amplitude of the inflation and growth rates of non-oil production can also be reduced.

Keywords: Fiscal and Monetary Policy; Fourth and Fifth Development Plants; Simulation and Fuzzy Control Methods. (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
ftp://80.66.179.253/eut/journl/20164-3.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eut:journl:v:20:y:2016:i:4:p:479

Access Statistics for this article

Iranian Economic Review (IER) is currently edited by Dr.Hossien Abbasinejad

More articles in Iranian Economic Review (IER) from Faculty of Economics,University of Tehran.Tehran,Iran Contact information at EDIRC.
Bibliographic data for series maintained by [z.rahimalipour] (rahimalipor@ut.ac.ir).