Impact of Monetary and Fiscal Shocks on Iranian Economic Growth and Income Distribution- A Dynamic Stochastic General Equilibrium

This paper examines impacts of money base and government shocks on economic growth and income inequality of Iranian economy using dynamic stochastic general equilibrium model. The New Keynesian approach was used to design appropriate model and definition the equations. Also, time series data of period 1961 to 2012 was used to calculate the parameters and the simulation the endogenous variables of model with real world. The behavior of the Gini coefficient and economic growth showed that during the selected period the Gini coefficient behavior is counter-cyclical to economic growth. Results based on impulse response functions indicate that money base and government shocks have increased the economic growth via aggregate production. On the other hand, productivity shock has increased economic through non-oil production growth. Oil income shock has increased economic growth through GDP Also, money base and government shocks have worsened household’s income distribution. So, income inequality was increased