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Is The Tax System in Iran an Efficient System? A Comparing of Fiscal Policies Effects on Iran Economy, by A Dynamic CGE Model

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  • Masoome Fouladi
  • Zahra Adel-Barkhordar

Abstract

Although there are many debates about the extent of government intervention and size of it, government intervention in the economy is unavoidable. Therefore government spending and tax are irresolvable components of the economy. Government expenditure and tax are fiscal policy instruments but how much they are effective and useful has been a challenge through economists. It seems and efficiency of these instruments depends on components of them. It means beside the size of government expenditure and quantity of tax, share of different expenditures in total expenditure and also share of different kinds of tax in total revenue tax are important for studying. In order to examine all aspect we use a dynamic computable general equilibrium model. The model solves for a sequence of single period equilibrium, thereby it is a recursive dynamic CGE model. The results show that according to the targets of policymakers, any taxes can be effective. But it should be noted that in Iran's oil economy declining in private spending to be offset by increasing government. If the oil is removed from the economy, raising tax will have a negative impact on production and it would be much more than the oil economy.

Suggested Citation

  • Masoome Fouladi & Zahra Adel-Barkhordar, 2014. "Is The Tax System in Iran an Efficient System? A Comparing of Fiscal Policies Effects on Iran Economy, by A Dynamic CGE Model," 2nd International Conference on Energy, Regional Integration and Socio-Economic Development 7692, EcoMod.
    • Handle: RePEc:ekd:006666:7692
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    References listed on IDEAS

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    1. Mahmoud Wahab, 2004. "Economic growth and government expenditure: evidence from a new test specification," Applied Economics, Taylor & Francis Journals, vol. 36(19), pages 2125-2135.
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    Keywords

    Iran; Tax and public finance;

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