Fiscal capacity, alternative to oil revenues in Iran

This paper examines the approach in getting rid of oil funds and lack of reliance on revenues from natural resources deals. Fiscal capacity is an alternative to achieve this goal. Fiscal capacity estimates in two stages. In the first stage، estimation is done by the stochastic frontier model by using ARDL، and then followed by Laffer curve estimation. The aggregate income is estimated according to the optimal fiscal ratios. Therefore، the calculated values of the collected amounts are optimal. Considering the fiscal capacity، help us to correct market failures and the redistribution of resources. The study findings show that the capacity of government revenue in some years is less than actual and with such a large source of income، oil revenues are not satisfied.