Management of Fiscal Policies and Business Cycles (The Case of Iran)

In this study, the authors provide a model to examine the effect of financial policies on business cycles in Iran using annual data for the period 1959–2007.Therefore, they have considered GNP as main cycle and have tried to incorporate variables representing financial, monetary and technological shock to constitute the model's framework and to test it. Their results show that the government spending and consumption cycles significantly and positively affect GDP cycle while capital expending cycle is not significant. Moreover, of government consumption expending, final consumption of the government in various ministries and affiliated institutes as well as the government final consumption costs in municipalities are positively and significantly effective; however, the government final consumption costs in social security organization have no significant impact on GDP cycles.