Financial sustainability is generally linked to current and future government policies. If governments do not expect current and future policies to create a periodic budget constraint, fiscal policy is called unsustainable. In this study, the effect of financial policy
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Financial sustainability is generally linked to current and future government policies. If governments do not expect current and future policies to create a periodic budget constraint, fiscal policy is called unsustainable. In this study, the effect of financial policy on Iran’s economic growth over the period 1350-2014 has been investigated using the ARDL method. The logarithms of GDP as the economic growth of dependent variable and foreign direct investment, the degree of economic openness and financial policy measures, including government consumption expenditures in the construction sector and current state taxes, are used as independent variables for model estimation. The results indicate that the GDP gap of up to two years has a positive and significant effect on the growth variable, foreign direct investment, tax revenue, economic openness and government expenditures. The effect of current government expenditures and government expenditures in the current sector has a negative and significant effect on GDP per capita in Iran.
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