Changes in fiscal policies can lead to fluctuations in economic and financial indicators.In this context, examining the dynamic relationship between fiscal policy volatility,financial deepening,and its instability is particularly important for developing economies like Iran. Understanding the dynamics of this relationship and their mutual impacts is crucial for policymakers to make informed decisions and steer the economy toward stability.This study employs the Time-Varying Parameter Vector Autoregression (TVP-VAR)econometric method, focusing on Iran's economy, to analyze the dynamic relationship between fiscal policy volatility,financial deepening, and its instability during the period 1973–2021. The findings indicate that financial deepening, especially in the mid-2010s,can exacerbate financial sector instability and fiscal policy volatility.Conversely, fiscal policy volatility,notably in the mid-1990s and 2010s, hinders financial deepening. Additionally, the results reveal a bidirectional relationship between fiscal policy volatility and the instability of financial deepening, particularly during the periods1976–1986and the 2010s.Therefore,adopting predictable and stable fiscal policies can prevent the intensification of instabilities in the financial deepening process and create a conducive environment for the healthy and sustainable development of Iran's financial sector. This study, by providing empirical evidence and utilizing the TVP-VAR method,contributes to a better understanding of the complexities of policymaking in the realm of fiscal policy and financial development