The effect of budget deficit on economic security of Iran

Document Type : Research Paper



this article tries to explain long term effects of budget deficit on inflation rate as a most important factor in Iranian economic security. Authors use structural auto-regression method to analyze outcomes of state budget deficit shocks. According to findings, structural shocks and fluctuations of budget deficit, has a meaningful positive effect on inflation rate, and also has a meaningful negative effect on economic growth. But, authors claim that these effects are less than effects of net money volume of state budget deficit. So, while we can claim that inflation in Iran has a monetary nature, it can be argued that budget deficit increases inflation and consequently weakens economic security.