Investigating the Effects of Taxation on the Profit of Bank Deposits on Inflation and GDP of Iran's Economy in the Form of a Dynamic General Equilibrium Model (DSGE)

Hasan Yosefizadeh (), Farzaneh Khalili () and Kamran Nadri ()
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Hasan Yosefizadeh: Phd student of Abhar Islamic Azad University
Farzaneh Khalili: Assistant Professor of Abhar Islamic Azad University
Kamran Nadri: Associate Professor of Economics at Imam Sadegh University

Quarterly Journal of Applied Theories of Economics, 2023, vol. 10, issue 1, 59-88

Abstract: In Iran's economy, the bank interest rate (interest) is determined by order, and due to high inflation rates, the real interest rate becomes negative and financial repression occurs. In this research, the effect of increasing the interest rate of bank facilities on the macroeconomic indicators of Iran has been investigated in the form of a New Keynesian Stochastic Dynamic General Equilibrium (DSGE) model. In order to achieve the goal of the research, in the form of a Dynamic Stochastic General Equilibrium (DSGE) model, in the period of 1987-2020, we estimated the model in MATLAB 2017 software, which includes the household sector, entrepreneurs, producers, government and monetary policy. Also, in order to match the reality of the country, the oil sector was included in the model. In this research, due to the fact that the bank interest rate is mandatory, the rate of changes in the volume of deposits was entered into the model as a shock instead of the tax shock on deposit interest. The results of the research show that the shock from the deposit interest tax has caused a decrease in inflation, a decrease in consumption in the short term, a decrease in investment and an increase in production in the long term. Based on the results of the research, it is recommended to tax the interest of bank deposits in Iran

Keywords: stochastic dynamic general equilibrium; bank deposit interest tax; bank interest rate; rate of changes in the volume of deposits (search for similar items in EconPapers)
JEL-codes: C53 E37 E47 H24 (search for similar items in EconPapers)
Date: 2023
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