Estimating the Degree of Fiscal Dominance and its Welfare Costs in a Dynamic Stochastic General Equilibrium (in Persian)

Tavakolian, Hossein

Estimating the Degree of Fiscal Dominance and its Welfare Costs in a Dynamic Stochastic General Equilibrium (in Persian)

Journal of Monetary and Banking Research (فصلنامه پژوهش‌های پولی-بانکی), 2014, vol. 7, issue 21, 329-359

Abstract: This paper studies the degree of fiscal dominance and its costs for the economy of Iran in a DSGE model. Resende & Rebei (2008) approach is used to model the degree of fiscal dominance and Leeper, Walker & Yang (2010) approach is used to model government investment. According to the first study it is assumed that a fraction of government debt is backed by discounted value of current and future primary surplus and the remaining fraction is backed by seigniorage. According to the second study, it is assumed that there is an implementation delays for building public capital projects. The results show that higher degree of fiscal dominance significantly affects the dynamics of all the main variables so that in in high fiscal dominance regimes there are lower output and higher inflation. The implementation delay is most effective when the shocks are from government.

JEL-codes: E42 E52 E62 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (1)

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