The Effect of Inflation on Government Revenue and Expenditure: The Case of the Islamic Republic of Iran
AbstractThis paper provides an empirical analysis of the government budget deficit, money supply growth and inflation in the Islamic Republic of Iran. We use a simultaneous equation system to examine the effect of inflation on government revenue and expenditure, using quarterly data. Our major finding has been that the government budget deficit will increase in the inflationary condition. In addition, the deficit will increase money supply and this tends to increase inflation in Iran. Copyright 2003 Organization of the Petroleum Exporting Countries .