Research Article Open Access

To Investigation the Relationship between Monetary, Fiscal Policy and Economic Growth in Iran: Autoregressive Distributed Lag Approach to Cointegration

Anvar Khosravi and Mohammad Sharif Karimi

Abstract

Problem statement: It is important for policy makers to find affect of monetary and fiscal policy on economic growth and to know how those impacts on growth to present a effective policies. Approach: We apply the bounds testing (ARDL) approach and to cointegration which is more appropriate for estimation in small sample studies. The data span for the study is from 1960-2006, the empirical results found a cointegration relations between Growth, monetary policy and fiscal policy in Iran. Results: The results indicated the impact of Exchange rate and inflation on growth was negative, government expenditure was found to have significant positive impact on growth. Conclusion: According to results for a sustainable economic growth in Iran, policy makers must try to decrease inflation rate and exchange rate also to find an equilibrium point for government expenditure in futures.

American Journal of Applied Sciences
Volume 7 No. 3, 2010, 415-419

DOI: https://doi.org/10.3844/ajassp.2010.415.419

Submitted On: 19 January 2010 Published On: 31 March 2010

How to Cite: Khosravi, A. & Karimi, M. S. (2010). To Investigation the Relationship between Monetary, Fiscal Policy and Economic Growth in Iran: Autoregressive Distributed Lag Approach to Cointegration. American Journal of Applied Sciences, 7(3), 415-419. https://doi.org/10.3844/ajassp.2010.415.419

  • 3,136 Views
  • 3,469 Downloads
  • 29 Citations

Download

Keywords

  • Iran
  • monetary policy
  • fiscal policy
  • growth
  • ARDL cointegration