Investigating the effect of financial policy on inflation with emphasis on government expenditures In Afghanistan in the period (1381-1395)

Abstract

The purpose of this study was to investigate the effects of current and development expenditures as instruments of fiscal policy and exchange rate, real money supply and GDP on macroeconomic variables such as inflation in the Afghan economy, using annual data, during the period (2002-2011). Is. In this regard, the econometric model of vector regression was used. The results show that in the short run, real current expenditures, real liquidity, and exchange rates increase inflation in Afghanistan. While the increase in real development expenditures and GDP reduces inflation are also statistically significant; But in the long run, it is only the increase in GDP that will reduce inflation in the Afghan economy. Considering the results obtained, in the short run, in order to control inflation, the share of construction expenditures in the government budget should be increased, and in the long run, discipline in government expenditures is the most effective policy in controlling inflation.