The effects of fiscal policy on economic growth in the Iranian economy: the space-state models

Macro-economic relationship between fiscal policy and economic growth has long been considered by economists. In this study to evaluate the more accurate effect of the government's fiscal policy in the economy, Using quarterly data for the years 1367 to 1395, using A Factor-Augmented Vector Autoregressive (FAVAR) model with time varying parameter model (TVP), Iran's economy has been modeling. The variables as GDP growth, investment growth, inflation, exchange rates, the growth of private consumption expenditure and latent variable of government fiscal policies arrived in model. Based on results the effects of fiscal policy on economic growth in the whole period is positive and investment increased the rate of economic growth. Also the additive positive effects of fiscal policy on the unofficial exchange rate has increased over time. In addition, the effect of fiscal policy on inflation is positive, so that the additive effect in economic prosperity period is more. Finally, the effect of fiscal policy on private sector spending is negative. Results of this study show change relationships between variables over time and the effects of economic conditions on How to impact of model variables on each other. So that monetary policy along with fiscal policy as a factor in the change of fiscal policies on the economy has acted.