Abstract:
This article addresses the explanation of optimal monetary and fiscal policies for the Iranian economy based on the Ramsey problem within the framework of a scale-invariant dynamic stochastic general equilibrium model by changing annual productivity growth. The model outputs indicate that despite price stickiness in a monopolistic competition market, zero or near-zero inflation emerges as the optimal result of the model. The imposition of a negative tax on capital (subsidy) is introduced as another result of the optimal policy in the model. With an increase in the productivity rate, such as an increase in knowledge and labor productivity, the level of production and supply increases, and consequently, even with an increase in aggregate demand, inflation does not occur. In fact, any policy that encourages the incentive to work and activity for members of society will lead to an increase in production and employment, and this increase in the annual productivity rate will reduce the inflation rate.
Machine summary:
In other words, prescribing an active monetary policy and the independence of the central bank in implementing its objectives and tools cannot necessarily help in pursuing the goal of price level stability; rather, understanding different fiscal tools and employing them in the presence of productivity growth, alongside securing the government budget and the symbolic problem, plays a very important role, which in this article, the existing scenarios have not only confirmed the above point but have also presented these scenarios for different conditions.
Therefore, this model helps the policymaker to use the set of fiscal tools alongside different amounts of productivity growth during the intended policy period and, considering the prevailing economic conditions, Table 5: Interest rate, inflation rate and optimal tax rates in different cases of annual productivity growth (Refer to the page image) When the government only has access to one tax (income tax), this tax is used as one of the ways to secure the government budget.
Additionally, the household demand equation for other points in the world for domestically produced tradable goods will be as follows, where ∗ global production and ∗ external technology shock are not: (Refer to page image) 9- Relative and Aggregate Prices Given the relationship of optimal prices from previous sections, the general price level in this economy 2 42 =∗(1+)1(+1⁄) 43 risk premium 7- Government To financially secure its exogenous expenditures, the government has access to a set of taxes such as consumption tax, h labor income tax, capital income tax, and firm profit tax.
(
, 
, 
)
