The Impact of Government Fiscal Policies (Taxes and Government Expenditures) on Macroeconomic Variables in a Stochastic Dynamic General Equilibrium Pattern

Document Type : Research Paper

Authors

• rouhollah abedkhani ¹
• seyed neamat ollah moosavi ²
• sharareh majdzadeh ³

¹ marvdasht azad uni

² Vice Chancellor for Planning and Economic Affairs, Marvdasht Azad University

³ miau

10.30495/jae.2022.29021.2293

Abstract

In order to investigate the effect of government fiscal policy on changes in tax revenues and current and development expenditures of the government on macroeconomic variables, the Stochastic Dynamic General Equilibrium (DSGE) method has been used in the period 1370-1396 and this is one of the characteristics of favorable fiscal policy. Its tools, namely government spending and taxes, are flexible.But in developing countries, there is no flexibility in fiscal policy. Taxes come down easily, but raising them is problematic, and vice versa for subsidies. The impact of government policy shocks on major variables such as consumption, investment, inflation and real GDP is undeniable. The government uses fiscal policy tools to guide the economy to achieve its goals at the macro level. It has investment and production and in the long run the effect of those shocks is positive.

Keywords

• financial policy
• government expenses
• Taxation

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