Explaining pro-cyclicality of fiscal policy in I. R. IRAN (1974-2007) with emphasis on oil price volatility

In this paper, we analyze the pro-cyclical behavior of fiscal policy in I. R.IRAN during1974-2007. For this aim, we estimate an econometric model with ARDL co-integration technique. The results showed that first; Woo (2009) hypothesis is accepted. In other words, in short- and long-run increases in social polarizations (income and education inequalities), increases fiscal policy pro-cyclicality. Second; Diallo (2009) hypothesis is accepted. In other words, institutional qualities in short- and long-run have the positive and significant effects on fiscal policy pro-cyclicality. Third; Oil price volatility has the positive and significant effects on fiscal policy pro-cyclicality.