new economy and trad

new economy and trad

Analysis of the Impact of Budget Deficit, Trade Deficit, and Savings Gap on Economic Welfare in Iran

Document Type : Research Paper

Authors
shahryar zaroki 1
Mehdi Hasanpour Varkolaei 2
Fatemeh Malatbar Firouzjae 3
1 Assistant Professor of Energy Economics, University of Mazandaran, Babolsar, Iran
2 PhD student in Economics, Mazandaran University, Babolsar, Iran.
3 Master's degree graduates in Economics, Mazandaran University, Babolsar, Iran
10.30465/jnet.2025.51019.2177
Abstract
Analyzing the impact of budget deficit, trade deficit, and the gap between savings and investment on economic welfare in Iran is a key issue in understanding the economic challenges of this country. This research employs a autoregressive distributed lag model to examine this topic in the Iranian economy from 1971 to 2023. The measure of economic welfare in this study is a composite welfare index. Short-term results indicate that the ratio of budget deficit to production and the ratio of trade deficit to production have negative effects on welfare, respectively. Additionally, the ratio of the savings and investment gap to production positively influences welfare. Inflation and per capita income also have negative and positive effects on welfare, respectively. In terms of magnitude, the adverse effect of the budget deficit is greater than that of the trade deficit, and the former's effect dominates the positive effect of the savings gap on production. However, regardless of whether they are desirable or undesirable, the magnitude of the effects of the trade deficit and budget deficit is larger than that of the savings and investment gap. In the long term, similar results are observed, with the positive effect of ...
Keywords
Economic welfare
budget deficit
trade deficit
savings gap
Iran
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  • Receive Date 18 January 2025
  • Revise Date 23 April 2025
  • Accept Date 20 May 2025