The effects of monetary and fiscal policies on the productivity of the industrial sector in Iran

Marziye Esfandyari¹ Saleh Shafipour²

1) PhD ,Corresponding Author, Assistant Professor, Economic Department, Faculty of Economics and Management, University of Sistan & Baluchestan, , Zahedan, Iran,

IOI Code : XYFD-BBBFZ
Publication : international conference on innovation in Science & Technology(istconf.com)
Abstract :
    The aim of this study is to investigate the effects of monetary and fiscal policies on the productivity of the industrial sector in Iran. To do so, interaction between monetary and fiscal policy and productivity of the industrial sector, during the years 1389-1376 have been evaluated with quarterly data using vector auto regression model (VAR). The findings show that the effect of liquidity shock increases productivity of the industrial sector but the magnitude is reduced over time . Following the government spending shock, productivity in the eighth period, reaches more than 0.012 and then decline. In other words, monetary and fiscal policies affect on productivity of the industrial sector in short-term. also, Liquidity growth has long-term impact on government spending. Variance decomposition shows that the productivity of the industrial sector in short-term and long-term largely influenced by the level of productivity and monetary and fiscal policies explain about 5.5 percent of the productivity changes and More than 33% of liquidity fluctuation in Iran is due to changes in government spending which confirm liquidity growth has been financed through government spending.

Keywords : monetary policy fiscal policy productivity vector auto regressive