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LIST 1399

Investigating the Effects of Consumption and Capital Expenditure Impulses of the Government Under Taylor's Rule and Growth Rate of Money (DSGE Model)

Document Type : ORIGINAL ARTICLE

Authors

1 Ph.D. Candidate, Department of Economics and Accounting, South Branch of Tehran, Islamic Azad University, Tehran.

2 2. Assistant Professor, Department of Economics and Accounting, South Branch of Tehran, Islamic Azad University, Tehran.

3 Assistant Professor, Department of Economics and Accounting, South Branch of Tehran, Islamic Azad University, Tehran, Iran.

Abstract

Since the infrastructure of growth and development has not been formed in the developing and oil-producing countries, and also the private sector does not have the power to operate in this field due to institutional reasons, weak financial and sometimes technical ability, among the factors affecting macroeconomic indicators. In these countries, government spending is more important, which affects the general planning process regarding the allocation of consumption and capital budgets to each of the economic activities. The purpose of this research is to investigate the effects of consumption and capital spending impulses the government is under Taylor's two rules of money and the growth of the money supply. To achieve this goal, a general equilibrium model of stochastic dynamics based on the new Keynesian view has been designed using the available information and statistics of Iran's economy during the period of 1991-2020 according to the realities of Iran's economy. Comparing the results obtained from the simulation in two separate models shows that there is not much difference between the interest rate tool and the growth rate of money to influence the variables of the real sector of the economy. On the other hand, in order to influence the non-real variables in the face of the mentioned impulses, the growth rate of the money volume has performed better than the interest rate.

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References
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Economic Growth and Development Research
Volume 14, Issue 53
January 2024
Pages 94-75
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History
  • Receive Date: 19 March 2023
  • Revise Date: 31 July 2023
  • Accept Date: 01 August 2023
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