The Impacts of Fiscal Policies on Production, Employment and Households’ Income in Iran: Computable General Equilibrium (CGE) Model Approach (in Persian)

Using a static computable general equilibrium model (CGE), this paper examines the impacts of different types of tax on important macroeconomic variables. In addition to tax, government expenditures were taken into consideration to attain a better understanding of the extent of government interference via taxing instrument. The results indicate that government expenditures exert stronger effect on output and employment. Meanwhile, the findings regarding an increase in taxes on income, foreign trade and economic sectors (tax on goods and services) illustrate that income tax has the least negative effect on GDP; but tax on foreign trade (tax on import) has the maximal effect on it. The current composition of tax revenues implies that the share of income tax in total tax revenues in Iran is less than that of global average. On the other hand, the share of tax on foreign trade in total tax revenues in Iran is above the global average. The results, additionally, confirm that an increase in “tax on import”, more than that of other types of taxes, will lead to more severe decrease in production; contrarily, an increase in income tax causes the least decrease in production. The impacts of an increase in tax revenues on other macroeconomic variables confirm that the negative effects of income tax on these variables are less than those of tax on import and tax on goods and services.