An examination of the effect of fiscal policy shock on stock market in: A DSGE approach

Document Type : Original Article

Authors

1 phd student of economics, Faculty of administrative science and Economics, university of isfahan, Iran

2 associated professor of economics, Faculty of administrative science and Economics, university of isfahan, Iran

3 assistant professor of economics, Faculty of administrative science and Economics, university of isfahan, Iran

Abstract

Financial markets, and especially the stock market, are one of the most important sources of financing investment projects in the path of economic growth and development, which are affected by various policies. The main purpose of this study is to analyze the effect of government fiscal policies on the stock market in Iran, which is examined by presenting a dynamic stochastic general equilibrium model. To this end, in designing the model, government spending, consumption tax rate, capital tax rates and wages tax rates were considered as fiscal policy instruments. The results of the the impulse responses to a shock of fiscal policy instruments show that government spending shocks, capital tax shocks, and wage tax shocks lead to a decline in intermediary firms' profits and stock price indices, but Consumer tax shocks lead to increases the profits of intermediaries and the stock price index.

Keywords

Economic Strategy
Volume 8, Issue 29 - Serial Number 29
September 2019
Pages 81-110

Files

Share

How to cite

Statistics