Total Factor Productivity and Analysis of the Effect of Government Fiscal Policy Instruments

Document Type : Research Paper

Authors

1 Associate Professor in Energy Economics, Faculty of Economics and Administration Sciences, University of Mazandaran

2 Assistant Professor in Economics, Faculty of Economics,University of Mazandaran, Babolsar, Iran

3 MA. Student in Economics, Faculty of Economics,University of Mazandaran, Babolsar, Iran

10.22051/ieda.2024.44992.1371

Abstract

The aim of this research is to analyze the asymmetric effect of the government's fiscal policy instruments on the total factor productivity in Iran. For this purpose, first, the total factor productivity is calculated by Solow's residual method in the period of 1978-2020, and then the ARDL and NARDL approach has been used to estimate the model. In such a way that the inverse effect of increases in the government size is more than three times the inverse effect of decreases in it, and the inverse effect of the tax burden during decreases is twice the inverse effect during increases. Inflation also has an inverse and asymmetric effect on productivity. In such a way that the favorable effect of reductions in inflation on productivity is more than the unfavorable effect of increases in it. The degree of trade openness has a direct and asymmetric effect on productivity, and the favorable effect of increases in the degree of trade openness is more than four times the unfavorable effect of decreases in it. Based on the results, it is suggested that the policy makers should pay attention to the asymmetry of the aforementioned factors in influencing the productivity while adopting appropriate policies in order to improve the productivity of the production factors.

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