The effect of monetary and financial policies on economic security in Iran

Abstract:

Today, one of the significant issues faced by developing countries is the challenge of ensuring economic security. The presence of economic security within a society can be crucial for achieving economic growth and development. On the other hand, the adoption of appropriate monetary and fiscal policies is also vital for establishing stability and attaining sustainable economic growth. Consequently, these policies can influence the economic security of communities. Therefore, the primary objective of this study is to examine the impact of monetary and fiscal policies on the economic security of Iran during the period from 1989 to 2021, utilizing the Structural Vector Autoregression (SVAR) method. In this study, the money supply and government expenditure are symbolically representative of monetary and fiscal policies, respectively. The results of the research indicate that shocks in both monetary and fiscal policies have a significant negative effect on economic security, leading to a reduction in the long term. Additionally, variables such as industrialization, urbanization, trade freedom, and unemployment have a significant positive effect on economic security, contributing to its enhancement. The variance decomposition results for the tenth period demonstrate that monetary policy shocks account for 27.35% and fiscal policy shocks account for 14.39% of the changes in economic security.