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J Tax Res 2025, 0 - : 123-154 |
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REZAEI E. Tax as a Tool for Fiscal Policy: Theory and Practice. J Tax Res 2025; https://doi.org/10.61882/taxjournal.0.123
URL: http://taxjournal.ir/article-1-2524-en.html
URL: http://taxjournal.ir/article-1-2524-en.html
SAMT , reze00@vse.cz
Abstract: (259 Views)
This study aims to determine if taxation can be considered an instrument for implementing fiscal policy in terms of “policy change,” “fiscal sustainability,” “effect on savings and total demand,” and “impact on economic decisions distortions”. To examine these aspects, the Cyclical-Adjusted Budget balance (CAB) will be chosen as a pivotal tool in generating indicators and econometric modeling to reflect the effects of fiscal policy on Iran’ economy from 2001 to 2023. Each of these aspects has its own unique characteristics and requires a specific indicator. The indicator reflecting the effect of taxation on total demand is not the same as the one showing the impact of fiscal sustainability. Therefore, the CAB will be flexible in addressing each macroeconomic variable. Creating indicators requires a sound theoretical justification, as implementing an empirical strategy without the theoretical background remains vague. The initial step involves reviewing the effects of taxation in partial and general equilibrium frameworks. This study attempts to assess this using both qualitative and quantitative analysis. Based on the theoretical demonstrations, creating indicators should procced smoothly. The CAB indicator for measuring the effects of policy changes will introduce variables such as the unemployment rate, government expenditure, Gross Domestic Product (GDP), elasticity of taxation with respect to GDP, and elasticity of taxation with respect to government expenditures. Non-linear regressions will be estimated to obtain coefficients before generating indicators. Theses coefficients will then be used in the indicator generation to determine the effects of taxation changes and other variables. This allows us to evaluate the efficacy of fiscal policy. Other indicators will be constructed for different purposes, such as measuring fiscal sustainability, using a different CAB. Before, presenting concluding remarks, the quantitative impact of fiscal adjustment and stimuli on macroeconomic variables like economic growth, private consumption growth, government expenditure growth, and tax revenue will be examined. The final part will attempt to design a policy recommendation package based on the previous steps.
Keywords: Fiscal Adjustment, Fiscal Stimuli, Cyclical-Adjusted Budget balance (CAB), Fiscal Sustainability, Policy changes
Type of Study: Research |
Subject:
Economic
Received: 2025/08/10 | Accepted: 2025/09/1 | Published: 2025/09/1
Received: 2025/08/10 | Accepted: 2025/09/1 | Published: 2025/09/1
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