Document Type : Exploratory
Authors
1 Associate Professor, Department of Public Administration, Payame Noor University, Tehran, Iran.
2 Assistant Professor, Department of Economics, Payame Noor University, Tehran, Iran
3 M.Sc. in Business Administration – International Business, University of Tabriz, Aras International Campus
Abstract
The theoretical framework of this study is based on the combined wavelet-TVP-VAR model. Time series data related to budget deficit and economic growth were analyzed after undergoing preprocessing steps including padding and normalization. Wavelet decomposition using the Daubechies 1 (db1) wavelet at decomposition level 3 revealed the presence of nonlinear and multi-scale patterns in the data. The dynamic net spillover diagram depicts the mutual interactions between the variables across different time periods. Using the Kalman filter and the bootstrap method, the time-varying parameters in the TVP-VAR model were estimated. The findings indicate that in the short run, the budget deficit has a positive effect on economic growth through mechanisms such as fiscal stimuli; however, this effect diminishes in the long run. Moreover, fluctuations in the budget deficit lead to instability in economic growth. This study emphasizes the importance of multi-scale and dynamic analytical approaches in examining macroeconomic relationships and recommends that policymakers adopt a comprehensive and balanced approach to budget deficit management in order to lay the foundation for sustainable economic growth. The findings underscore the necessity of balanced budget deficit management in government organizations to reduce instability and strengthen economic performance.
Keywords
Budget deficit, Economic growth, Iran, combined wavelet model, fiscal stimuli.
Keywords
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