Investigating the influencing factors on the government budget deficit in Iran with an emphasis on Islamic financial instruments and exchange rates (ARDL approach)

Document Type : Research Paper

Authors

1 Academic staff of Islamic Azad University of Zanjan

2 Department of Accounting. Islamic Azad Universuty. Zanjan branch

Abstract

Subject and purpose of the Article: Financing the budget deficit through borrowing from the central bank has negative effects on inflation, and the use of Islamic securities is proposed to reduce the budget deficit. The main purpose of research is to investigate the effect of Islamic financial instruments, exchange rate, current government expenses and investment on the budget deficit in Iran.
Research method: This research is applied in terms of purpose and descriptive-causal in terms of data collection. The information of the variables from the central bank during the period of 2004-2020 was seasonal and the ARDL approach was used in the estimation with EViews 9 software.
Research Findings: The long-term estimation show that the exchange rate has a slight negative effect on the budget deficit. The ratio of bond sales to real GDP reduces the budget deficit, and the ratio of investment to real GDP has not had a significant effect on the dependent variable. Also, the growth of the government's current expenses increases the budget deficit.
Conclusion, originality and its contributions to the knowledge: In order to have a significant effect on the budget deficit, financial bonds should increase production. This issue is done through connecting the financial sector and the real sector of the economy as much as possible. the improvement of the budget deficit from the export channel occurs when the productive and competitive power of the economy is at a suitable level and the economy is not based solely on the sale of raw materials

Keywords

Main Subjects

References

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History

  • Receive Date: 20 October 2023
  • Revise Date: 27 June 2024
  • Accept Date: 07 July 2024

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