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The Effect of Inflation on Government Revenue and Expenditure: The Case of the Islamic Republic of Iran

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  • Abbas Alavirad

Abstract

This paper provides an empirical analysis of the government budget deficit, money supply growth and inflation in the Islamic Republic of Iran. We use a simultaneous equation system to examine the effect of inflation on government revenue and expenditure, using quarterly data. Our major finding has been that the government budget deficit will increase in the inflationary condition. In addition, the deficit will increase money supply and this tends to increase inflation in Iran.

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  • Abbas Alavirad, 2003. "The Effect of Inflation on Government Revenue and Expenditure: The Case of the Islamic Republic of Iran," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 27(4), pages 331-341, December.
    • Handle: RePEc:bla:opecrv:v:27:y:2003:i:4:p:331-341
    DOI: 10.1111/j.0277-0180.2003.00074.x
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    References listed on IDEAS

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    1. Kiguel, Miguel A, 1989. "Budget Deficits, Stability, and the Monetary Dynamics of Hyperinflation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 21(2), pages 148-157, May.
    2. Mohammad Aslam Chaudhary & Naved Ahmad, 1995. "Money Supply, Deficit, and Inflation in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 34(4), pages 945-956.
    3. Aghevli, Bijan B & Khan, Mohsin S, 1977. "Inflationary Finance and the Dynamics of Inflation: Indonesia, 1951-72," American Economic Review, American Economic Association, vol. 67(3), pages 390-403, June.
    4. Alex Mourmouras & José A. Tijerina, 1994. "Collection Lags and the Optimal Inflation Tax: A Reconsideration," IMF Staff Papers, Palgrave Macmillan, vol. 41(1), pages 30-54, March.
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    3. Ofori, Isaac Kwesi & Obeng, Camara Kwasi & Armah, Mark Kojo, 2018. "Exchange rate volatility and tax revenue: Evidence from Ghana," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 6(1).
    4. Pazouki, Azadeh & Zhu, Xiaoxian, 2022. "The dynamic impact among oil dependence volatility, the quality of political institutions, and government spending," Energy Economics, Elsevier, vol. 115(C).
    5. Magazzino, Cosimo, 2011. "The nexus between public expenditure and inflation in the Mediterranean countries," MPRA Paper 28493, University Library of Munich, Germany.
    6. Onyemachi Maxwell Ogbulu & Lezaasi Lenee Torbira & Chizoba Lynda Umezinwa, 2015. "Assessment of the Impact of Fiscal Policy Operations on Stock Price Performance: Empirical Evidence from Nigeria," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 6(2), pages 190-202, April.
    7. Magazzino, Cosimo, 2010. "Public expenditure and revenue in Italy, 1862-1993," MPRA Paper 27308, University Library of Munich, Germany.

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