Investigating the Existence of New Non-Ricardian Regime Policy in Iran

The aim of this paper is to investigate the existence of the new non-Ricardian regime policy in Iranian economy. We detected signs of the non-Ricardian regime from quarterly data of 1369 to 1391. To investigate further a dynamic stochastic general equilibrium model is designed to estimate the fiscal and monetary parameters using a Bayesian approach. Our results indicated a passive monetary policy and an active fiscal policy presence which are evidence of a new non-Ricardian regime. To prove the robustness of our results, criteria such as posterior odds ratio and impulse response functions are used in this research. Based on posterior odds ratio, Non-Ricardian policy has more ability to describe data than Ricardian policy. According to the impulse response function, in reaction to positive government debt shocks, Non-Ricardian policy implementation is more compatible with the behavior of the Iranian economy than the other.