The Role of National Development Fund in Boosting Economic Growth and Curbing Inflation

Document Type : Original Article


1 Ph.D Candidate in Economics, Faculty of Economics, Management and Administrative Sciences, Semnan University, Semnan, Iran

2 Associate Professor of Economics, Faculty of Economics, Management and Administrative Sciences, Semnan University, Semnan, Iran

3 Associate Professor of Economics, Faculty of Economics and Political Sciences, Shahid Beheshti University, Tehran, Iran


Since the foundation of National Development Fund (NDF) in 2010 until 2019, more than 100 billion Dollars of oil export revenues are held under its management. The NDF missions are set to finance private investments and save the Nation’s Wealth for the next generations. In this article we have tried to show the economic impact of NDF’s presence in the Iranian economy and asses its success on boosting economic growth and curbing inflation. In doing so, we have constructed a dynamic structural macro-econometric model, consisting of 25 behavioral equations, 7 connecting equations and 62 identities and definitional equations, covering 200 economic variables at the macro level. The parameters of the model are estimated in co-integration concept by adapting the latest achievements in time series analysis. The data used are for the period 1338 - 1396. Dynamic simulations are used to validate the consistency of the model. To assess the impact of NDF's presence in the Iranian economy, we have removed NDF from the model and performed a dynamic simulation for the period 1990 - 1996. Then the results are compared with the case of NDF’s presence in the economy. We found that because of NDF's presence, the GDP growth is 2.2 percent higher on the average, while inflation rate and unemployment rate are on the average lower by 1.5 and 2.1, respectively.


- Al-hassan, A., Papaioannou. M., & Skancke, M. (2013). Sovereign Wealth Funds: Aspect Governance and Investment Management. IMF Working Papers. 13/231.
- Bahrami, J., Daneshjafari, D., Sayadi, M. & Pasha, P. (2018). Designing a Dynamic Macro Econometric Model for the Iranian Economy With Emphasizing on Dynamics of the National Development Fund. Journal of Economic Modeling Research, 9 (33), 43-88 (In Persian).
- Bastani, A., Razmi S. M. J., Naji, A. A. & Baki Haskuee, M. (2018). Optimal Fiscal Rule for Oil Revenue Allocation: Stabilization Role of National Development Fund. Journal of Energy Planning and Policy Research, 4(11), 67-104 (In Persian).
- Bostan, M. & Ergen, M, (2017). The Role of Wealth Funds in an Entrepreneurial Economy. Turkish Policy Quarterly, 16(2), 39-46.
- Lenihan, A. T. (2014), Sovereign Wealth Fund and the Acquisition of Power. New Political Economy, 19(2), 227-257.
- Noferesti, M. & Abdolahi M. (2018). The Evaluation of Allocating National Development Fund's Resources to Economic Sectors: Structural Macro-Econometric Modeling.  Journal of Sustainable Growth and Development (The Economic Research), 18(1), 107-125 (In Persian).
- Pedram, M., Jamshidloo, R., & Shirinbakhsh, S. (2019). The Role of Various Oil Fund Scenarios on Production and Inflation Variables in Iran. Quarterly Energy Economics Review, 14 (59), 55-83 (In Persian).
- Tavakoli Ghochani, S., Houshmand, M., Salimifar, M. & Gorji, E. (2020). The Role of National Development Fund in Confrontation Oil Shocks in Iran Economy from Government Expenditure Channel by Using a Dynamic Stochastic General Equilibrium Model. Quarterly Journal of Applied Economics Studies, Iran, 9(33), 57-91 (In Persian).
- Vasudeva, G., Nachum, L. & Say, G. D. (2017). A Signaling Theory of Institutional Activism: How Norway’s Sovereign Wealth Fund Investment Affect Firm’s Foreign Acquisitions. Academy of Management Journal, 61(4), 1583-1611.
- Wren-Lewis, S. (2018). Ending the Micro Foundations Hegemony. Oxford Review of Economic Policy, 34(1-2), 55–69.
- Wu, F., & Seah, A. (2008). Would China’s Sovereign Wealth Fund Be a Menace to the USA? China and World Economy, 16(4), 33-47.