Good governance effects on seigniorage in Iran
Subject Areas : Economy
Ali Rashid Shamkhal
1
,
Kambiz Paykarjou
2
,
Beitollah Akbari Moqadam
3
1 - PHD student Islamic Azad University of Tehran Science and Research Branch
2 -
3 - Associate professor of Islamic Azad University of Qazvin Branch
Keywords: seigniorage, good governance, SVAR,
Abstract :
The privilege of seigniorage is greatly significant for the government both in terms of its sovereignty and in terms of economic state. The power gained through the right to publish money can be managed by the central bank independently or by social institutions based on good governance. According to the theory of financial dominance, the practice of monetizing deficits undermines the independence of the central bank, rendering it unable to exercise proper monetary control and policymaking. The present study investigates the relationship between good governance and seigniorage in Iran based on a structural vector autoregressive model in period of 1374-1400. This study cautiously confirms the negative correlation between the good governance index and the government's use of seigniorage. Moreover, the findings indicated the fundamental and lasting effects of good governance shocks on seigniorage up to fifteen seasons. The analysis of variance results indicated the growth of oil-based revenues explained 6.15 % of the changes of seigniorage in the first season, which is indicative of its immediate effect on governmental decisions.
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