The Effect of Unemployment Rate on Fiscal Policy in the Political Cycle

Unemployment is one of the big problems that the country is facing. On the other hand, governments seek to avoid social unrest caused by problems such as unemployment. Therefore, in this research, the government s policy in the face of social unrest caused by the unemployment rate has been investigated. In this regard, the effect of the unemployment rate as a representative of social unrest on public debt, government expenses, and tax revenues in 31 provinces in 2011-2019 has been studied. The feasible generalized least squares (FGLS) method was used to estimate this study s regression model. The results of this research show that with the increase in the unemployment rate, the government s public debt has significantly increased. The government s tax revenues have decreased, which indicates that the ruling governments in Iran from 2011 to 2020 are facing unrest caused by They have used the unemployment rate from issuing public debt.