American Journal of Applied Sciences

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

DOI : 10.3844/ajassp.2010.415.419

American Journal of Applied Sciences

Volume 7, Issue 3

Pages 415-419

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.

Copyright

© 2010 Anvar Khosravi and Mohammad Sharif Karimi. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.