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The effects of shock of budget deficit and its financing methods on income inequality and economic insecurity | ||
| پژوهشنامه اقتصاد کلان Macroeconomics Research Letter | ||
| Volume 20, Issue 48, December 2025, Pages 55-88 PDF (1.01 M) | ||
| Document Type: Scientific paper | ||
| DOI: 10.22080/mrl.2025.29972.2200 | ||
| Authors | ||
| Alireza Fathi* ; Fatemeh Zandi; Bijan Safavi; Mahnaz Rabiei | ||
| Department of Economics, ST.C., Islamic Azad University, Tehran, Iran | ||
| Receive Date: 04 September 2025, Revise Date: 14 November 2025, Accept Date: 19 November 2025 | ||
| Abstract | ||
| The purpose of this study is to investigate the impact of shock of budget deficit, public sector debt and government financing methods on the composite index of economic well-being (with an emphasis on the components of income inequality and economic insecurity) using a structural autoregressive (SVAR) model and annual data from 1372 to 1402 S.H.. The results indicate that in the long run, budget deficits do not have a significant effect on the components of income inequality and economic insecurity. In contrast, the public sector (government debt to the banking system, including borrowing from the central bank, banks, and credit institutions) reduces income inequality and increases economic insecurity. Also, increasing liquidity and money circulation do not have a significant effect on income inequality but exacerbate economic insecurity. The bond issuance has a neutral effect on income inequality and at the same time reduces economic insecurity. Direct taxes increase income inequality, while indirect taxes have a negative effect on income inequality. In addition, direct and indirect taxes will increase economic insecurity. Accordingly, it can be concluded that the budget deficit alone does not have an impact on the components of the composite index of economic well-being; rather Its financial methods can affect the components of income inequality and economic insecurity. | ||
| Keywords | ||
| Government Budget Deficit; Public Sector Debt; Government Financing Methods; Income Inequality; Economic Insecurity | ||
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