Volume 27, Issue 3 (Autunm 2022)
JPBUD 2022, 27(3): 75-108 |
Back to browse issues page
Download citation:
BibTeX | RIS | EndNote | Medlars | ProCite | Reference Manager | RefWorks
Send citation to:
BibTeX | RIS | EndNote | Medlars | ProCite | Reference Manager | RefWorks
Send citation to:
Maghsoudpour M, Salimifar M, Salehnia N. (2022). Selecting the Government Financial Rule for Reducing the Negative Effects of the Oil Sanctions on the Selected Macroeconomic Variables in Iran: Adopting the Stock-Flow Consistent Model. JPBUD. 27(3), 75-108. doi:10.52547/jpbud.27.3.75
URL: http://jpbud.ir/article-1-2141-en.html
URL: http://jpbud.ir/article-1-2141-en.html
1- Faculty of Economic and Administrative Sciences, Ferdowsi University of Mashhad, Mashhad, Iran
2- Faculty of Economic and Administrative Sciences, Ferdowsi University of Mashhad, Mashhad, Iran ,mostafa@um.ac.ir
2- Faculty of Economic and Administrative Sciences, Ferdowsi University of Mashhad, Mashhad, Iran ,
Abstract: (1890 Views)
Financial rules can prevent budget fluctuations by regularizing the financial relations of the public sector. This research analyzes four financial rules in the framework of the Stock-Flow Consistent model. These rules are government spending as a constant ratio of GDP, government budget deficit as a constant ratio of GDP, government debt as a constant ratio of GDP, and a balanced budget. The simulation results of the research model for 50 years (2011-2061) show that the choice of financial rule can differ depending on the government's goals, the desired time horizon, and the economic conditions. Among the examined rules, government spending as a fixed ratio of GDP is optimal in the condition of oil sanctions, since it reduces the negative effects of oil sanctions on the selected macroeconomic variables of the model. Considering the importance of choosing a financial rule in accordance with changing economic conditions, such as an oil sanction, it is suggested that the rules should be designed considering the requirements of the country's economy and the goals of the policymaker, and get revised with changes in economic conditions or changes in the priority of goals.
Keywords: Oil Sanction, Financial Rules, Government Budget Deficit, Balance Sheet Matrix, Transaction Matrix, Stock-Flow Consistent Model
Type of Study: Research |
Subject:
public economics
Received: Aug 27 2022 | Accepted: Dec 17 2022 | ePublished: Feb 08 2023
Received: Aug 27 2022 | Accepted: Dec 17 2022 | ePublished: Feb 08 2023
References
1. Alesina, A. F., & Tabellini, G. (1988). Voting on the Budget Deficit. National Bureau of Economic Research Cambridge, Working Paper No. 2759. [DOI:10.3386/w2759]
2. Altunbaş, Y., & Thornton, J. (2019). The Impact of Financial Development on Income Inequality: A Quantile Regression Approach. Economics Letters, 175(1), 51-56. [DOI:10.1016/j.econlet.2018.12.030]
3. Alvani, S. M., Poorezat, A., & Nikmaram, S. (2012). Reflection on Interest Groups' Influences on Budgeting in Iran. Journal of Management Research in Iran, 16(1), 1-18. [https://mri.modares.ac.ir/article_50.html]
4. Bahrami, J., & Rafei, M. (2014). Sound Fiscal Reactions to Stochastic Shocks: A DSGE Approach. Iranian Journal of Economic Research, 19(58), 1-37. [https://ijer.atu.ac.ir/article_977.html]
5. Baltar, C. T. (2015). Inflation and Economic Growth in an Open Developing Country: The Case of Brazil. Cambridge Journal of Economics, 39(5), 1263-1280. [DOI:10.1093/cje/beu073]
6. Bjørnland, H. C., & Thorsrud, L. A. (2019). Commodity Prices and Fiscal Policy Design: Procyclical Despite a Rule. Journal of Applied Econometrics, 34(2), 161-180. [DOI:10.1002/jae.2669]
7. Burgess, S., Burrows, O., Godin, A., Kinsella, S., & Millard, S. (2016). A Dynamic Model of Financial Balances for the United Kingdom. Staff Working Paper No. 614 [DOI:10.2139/ssrn.2835386]
8. Byrialsen, M., & Raza, H. (2020). An Empirical Stock-Flow Consistent Macroeconomic Model for Denmark. Levy Economics Institute, Working Papers Series. No. 942. [DOI:10.2139/ssrn.3515450]
9. Dafermos, Y., Nikolaidi, M., & Galanis, G. (2017). A Stock-Flow-Fund Ecological Macroeconomic Model. Ecological Economics, 131(1), 191-207. [DOI:10.1016/j.ecolecon.2016.08.013]
10. Davoodi, M. H. R., Elger, P., Fotiou, A., Garcia-Macia, M. D., Han, X., Lagerborg, A., . . . Medas, M. P. A. (2022). Fiscal Rules and Fiscal Councils: Recent Trends and Performance during the COVID-19 Pandemic. International Monetary Fund, Working Paper, WP/22/11 [DOI:10.5089/9798400200472.001]
11. Dunz, N., Naqvi, A., & Monasterolo, I. (2021). Climate Sentiments, Transition Risk, and Financial Stability in a Stock-Flow Consistent Model. Journal of Financial Stability, 54(1), 100872. [DOI:10.1016/j.jfs.2021.100872]
12. Farhadi, D., Danesh, H. A., Ansari Samani, H., & Keshavarz, H. (2019). The Effect of Countercyclical Fiscal Rules on the Iranian Economy with an Emphasis on the Oil Sector (With the National Development Fund). Economic Growth and Development Research, 9(36), 77-94. [https://egdr.journals.pnu.ac.ir/article_5822.html]
13. Ghasemi, M., & Mohajeri, P. (2015). Appropriate Fiscal Rules for Financial Policy in Iran. Planning and Budgeting, 20(2), 59-84. [http://jpbud.ir/article-1-1149-fa.html]
14. Godley, W., & Lavoie, M. (2006). Monetary Economics: An Integrated Approach to Credit, Money, Income, Production and Wealth: Palgrave Macmillan.
15. Gouvea, R. R., & Lima, G. T. (2013). Balance‐of‐Payments‐Constrained Growth in a Multisectoral Framework: A Panel Data Investigation. Journal of Economic Studies, 40(2), 240-254. [DOI:10.1108/01443581311283691]
16. Jalles, J. T. (2018). Fiscal Rules and Fiscal Counter-Cyclicality. Economics Letters, 170(1), 159-162. [DOI:10.1016/j.econlet.2018.06.020]
17. Kopits, G., & Symansky, S. (1998). Fiscal Policy Rules. International Monetary Found, Occasioanl Paper 162. [DOI:10.5089/9781557757043.084]
18. Lavoie, M. (2014). A Comment on 'Endogenous Money and Effective Demand': A Revolution or a Step Backwards? Review of Keynesian Economics, 2(3), 321-332. [DOI:10.4337/roke.2014.03.04]
19. Leeper, E. M., Walker, T. B., & Yang, S.-C. S. (2010). Government Investment and Fiscal Stimulus. Journal of Monetary Economics, 57(8), 1000-1012. [DOI:10.1016/j.jmoneco.2010.09.002]
20. Mazzi, B. (2013). Treasury Finance and Development Banking: A Guide to Credit, Debt, and Risk: John Wiley & Sons. [DOI:10.1002/9781118738177]
21. Mercure, J.-F., Pollitt, H., Viñuales, J. E., Edwards, N. R., Holden, P. B., Chewpreecha, U., . . . Knobloch, F. (2018). Macroeconomic Impact of Stranded Fossil Fuel Assets. Nature Climate Change, 8(7), 588-593. [DOI:10.1038/s41558-018-0182-1]
22. Moreno-Brid, J. C. (1998). On Capital Flows and the Balance-of-Payments-Constrained Growth Model. Journal of Post Keynesian Economics, 21(2), 283-298. [DOI:10.1080/01603477.1998.11490194]
23. Moreno‐Brid, J. C. (2003). Capital Flows, Interest Payments and the Balance‐of‐Payments Constrained Growth Model: A Theoretical and Empirical Analysis. Metroeconomica, 54(2‐3), 346-365. [DOI:10.1111/1467-999X.00170]
24. Nikiforos, M., & Zezza, G. (2018). Stock‐Flow Consistent Macroeconomic Models: A Survey. Analytical Political Economy, 31(5), 63-102. [DOI:10.1002/9781119483328.ch4]
25. Omotosho, B. S. (2022). Oil Price Shocks and Monetary Policy in Resource-Rich Economies: Does Capital Matter? Journal of Economic Dynamics and Control, 143(1), 104479. [DOI:10.1016/j.jedc.2022.104479]
26. Papadimitriou, D. B., Nikiforos, M., & Zezza, G. (2013). The Greek Economic Crisis and the Experience of Austerity: A Strategic Analysis. The Levy Economics Institute of Bard College, 1-25.
27. Papadimitriou, D. B., Nikiforos, M., & Zezza, G. (2016). A Complementary Currency and Direct Job Creation Hold the Key to Greek Recovery. Levy Economics Institute.
28. Persson, T., & Svensson, L. E. (1989). Why a Stubborn Conservative Would Run a Deficit: Policy with Time-Inconsistent Preferences. The Quarterly Journal of Economics, 104(2), 325-345. [DOI:10.2307/2937850]
29. Rogoff, K. S. (1987). Equilibrium Political Budget Cycles. National Bureau of Economic Research Cambridge, Working Paper No. 2428. [DOI:10.3386/w2428]
30. Schaechter, M. A., Kinda, M. T., Budina, M. N., & Weber, A. (2012). Fiscal Rules in Response to the Crisis: Toward the" Next-Generation" Rules: A New Dataset: International Monetary Fund, Working Paper, WP/12/187. [DOI:10.5089/9781475505351.001]
31. Tavakolian, H., Mohammadi, T., & Siami Iraqi, S. (2020). Determining the Fiscal Rule of the Budget Balance for the Iran Economy, Stochastic Dynamic General Balance Approach (DSGE). Quarterly Journal of Economic Research and Policies, 28(95), 7-53. [http://qjerp.ir/article-1-2647-fa.html] [DOI:10.52547/qjerp.28.95.7]
32. Thirlwall, A. P. (1979). The Balance of Payments Constraint as an Explanation of International Growth Rate Differences. BNL Quarterly Review, 32(128), 45-53.
33. Thirlwall, A. P. (2012). Balance of Payments Constrained Growth Models: History and Overview. In P. A. Cerqueira (Ed.), Models of Balance of Payments Constrained Growth (pp. 11-49): Palgrave Macmillan. [DOI:10.1057/9781137023957_2]
34. Thirlwall, A. P., & Hussain, M. N. (1982). The Balance of Payments Constraint, Capital Flows and Growth Rate Differences between Developing Countries. Oxford Economic Papers, 34(3), 498-510. [DOI:10.1093/oxfordjournals.oep.a041565]
35. Zezza, F. (2018). Stock-Flow Consistent Macroeconomic Models: Theory, Practice and Applications. Unpublished Phd Thesis, University of Siena.
| Rights and permissions | |
.jpg) |
This work is licensed under a Creative Commons Attribution 4.0 International License. |
