چکیده:
In this paper, we dealt with fiscal dominance, which is a situation in which the fiscal
authority sets its expenditure and taxes without regard to any requirement of
intertemporal budget balance. Therefore, the monetary authority must adjust its policies
to ensure that the government budget is in balance. The existence of oil revenues for the
government on the one hand and its lack of access to the financial market, on the other
hand, are reasons that we can see financial repression and fiscal dominance in the
economy of Iran. This paper presents forward-looking estimates of the relationship
between the change in the consolidated primary deficit and the change in the monetary
base. This study covers the period 1978-2017, and an autoregressive approach is applied.
We conclude that using the budget data only, the existence of fiscal dominance cannot be
rejected.
خلاصه ماشینی:
It is also of crucial importance in countries with the resource-based economy, since whether policymaker looks for a managed exchange rate regime or desires a more independent monetary policy (and inflation targeting programs), then monetary dominance would be presumably necessary (see Savastano (1992), Tornell and Velasco (1998), Elbadawi, Goaied and Ben Tahar (2017)).
They argue that changes in the monetary base may occur as a result of fiscal policy without being reflected in net credit to the government in the central bank accounts which were an instrument for investigating fiscal dominance in some previous studies.
Asgharpur, Salmani, and Oskoui (2015) replicate the study of Da Costa and Olivo for Iran during 1979-2012 using government debt to the Central Bank as an instrument for monetary policy and government deficit (without oil income) as an instrument for fiscal policy.
Asgharpur, Salmani, and Oskoui (2015) replicate the study of Da Costa and Olivo for Iran during 1979-2012 using government debt to the Central Bank as an instrument for monetary policy and government deficit (without oil income) as an instrument for fiscal policy.
The intervention of the central bank in the foreign exchange market, together with the government’s financing of expenditures with oil-related receipts are reasons that Da Costa and Olivo (2008) introduce a measurement named gamma with which they try to indicate the link between changes in the monetary base and fiscal policy.
For a long time, net government debt to the Central Bank was a major component of the monetary base, which also relates to seigniorage and fiscal dominance more directly.