University of Isfahan International Economics Studies 2008-9643 37 2 2023 02 20 Effects of Fiscal and Monetary Policies on the Iranian Economy: An Optimal Control Approach 81 100 15533 10.22108/ies.2023.15533 EN Mostafa Rajabi Azad University, Khomeini Shahr Branch, Isfahan Homayoun Ranjbar Islamic Azad University, Khorasgan Branch, Isfahan Fojan Tadyon Islamic Azad University, Khorasgan Branch, Isfahan Journal Article 2016 06 14 This paper evaluates the interacted effects of the fiscal and monetary policies on the nominal and real macro-variables of the Iranian economy. Our analysis is thus based on the optimal control theory by which the optimal path of the control variables including monetary and fiscal tools are determined over the period 1963-2006. We also use a macro-econometric model in form of a simultaneous equation system to investigate interaction between both real and money (nominal) sectors. Due to the importance of the foreign sector in the country economic development, several scenarios have been conducted particularly on imports. The empirical results indicate that a focus simultaneously on both monetary and fiscal policies should cause an optimal control of the objective variables to reach approximately their appropriate values. This would be happened as a result of a productive relationship between the government and the central bank.  JEL Classification: C32, C61, E52, E63. https://ies.ui.ac.ir/article_15533_989715259693649bcaba7625aa3ac097.pdf