The Role of Fiscal Reforms in Curbing Chronic Moderate Inflation in Iranian Economy: A Qualitative Meta-Analysis

During the period 1969-2017, Iranian economy’s inflation rate was on average 19 percent which did not have a downward trend; hence the name chronic moderate inflation. In the present paper, by reviewing 110 theoretical and empirical studies and 83 studies on the Iran’s economy, a meta-analysis on the role of budget structure for explaining the persistence of the chronic moderate inflation rate of Iran is presented. This analysis shows that the budget structure (deficit, operating deficit, capital surplus, and financing) has been the driving force behind the continual increase in the liquidity as well as the permanent repression of interest rates in the post-revolutionary period. Therefore, change in financial and monetary strategies (and not policies necessarily) is a precondition to control the liquidity and inflation. Accordingly, some budgetary rules are needed to improve the process of decision-making and parliament-government-central bank interactions. In addition, a clear consensus has been reached about the inflationary effects of government budgets in the Iranian economy, so it is recommended that future researches focus on how the new rules can affect interaction between the fiscal and monetary autorities using game theory.